Which is least damaging on your credit report, a foreclosure or a bankruptcy? I have a house that's about to be foreclosed on, it's not my primary residence. Although I have very little income now, my other TL are fine, and my credit - aside from the mortgage - was pretty good (good enough to get a prime mortgage rate 2 years ago). I have the option of letting the foreclosure happen, or declaring BK (tanking all my open positive tradelines) and turning the house back as part of the proceedings. I'm also trying to negotiate a deed-in-lieu but it is complicated because I have a first and second mortgage. The advantage of the BK is that it could protect me from a deficiency judgement in the event that the bank can't recoup their investment. But I hate the thought of ruining a 12+ year credit file. Which would give me the shortest possible recovery time and future hope of buying a house again, or getting a car loan? Any thoughts/advice welcome! Thanks! Poochie
I'm thinking your credit is already screwed if you are 90 days past due (foreclosure proceedings getting started, right?) I don't know about chp 7 as when I filed in 91 we did not own our home (we were renting at that time). I think in some states you can keep your primary residence and stop foreclosure proceedings if you file. I would consult with an attorney though cause losing your home is gonna really hurt your credit rating.
Just to clarify - it's not my primary residence, and I'd be more than happy to just give them the keys. It would be a lot easier if there was only one mortgage to contend with.
You would have to file a CH13. The CH 13 deletes at the same time as a foreclosure. So time is not a factor for your bureau. I have heard that the foreclosure is the better option, but I have no proof of that statement. The problem with going with the BK is multifaceted. Given the fact that this is not your primary residence the trustee will not allow you to keep it anyway. Most likely you would lose the house to foreclosure and have both on your bureau. (Lifting of the stay.) Even if you didn't lose that house, your debts would now reflect the BK. I have heard that some folks saved their homes via BK. Years later the BK deletes, but the 'current' mortgage still reflects "included in BK" and they have a heck of a time trying to get that "comment" removed.
Have you considered having an absolute auction? I have seen builders do that when they can't move houses. You could call an auction house and get info. Just a suggestion, I have never personally tried this. Could you rent it out? Good Luck, Michelle
Depending on the state you live in... If you file bankruptcy, you could be forced to sell your primary home to pay your debts. You cannot just give them the keys...unless you want to deal with a lot of legal trouble later. Remember, the lender doesn't want the house...especially in this housing market. They either want the payment or the money from the sale. If your income isn't going to imporove in the near term, and you don't have a lot of equity in your primary home, you might just go with the bankruptcy.
My primary residence is in husbands name - the only personal asset I have is a 9 year old station wagon. I have three CCs which are all current. The house in trouble is the one I bought before I was married. It's hard to tell how much equity I have in it - the fair market value is right at or a little above what I owe, but I'm sure an auction would net much less. I hate this! I've had it on the market since October, and when it was rented the tenants broke both a lease and a rent-to-own agreement. Anyway, thanks for all the help, and any other opinions are welcomed and appreciated. Poochie
Wow, since October. Have you lowered it to the bottom of what you need out of it? Maybe a new, aggressive listing agent is needed? Have you had any feed back from your agent as to what may be holding buyers back? Michelle
Re: Re: Which is least damaging? (BK/4clos) Yep - since October. The house is very old (+/- 75 years) and full of character. It has new systems, but these older homes just aren't laid out in a way that suits modern living sometime. The market in my city is saturated, there are a ton of properties that have been sitting for a year or longer. We have drained our accounts everywhere trying to pay both the mortgages, plus doing some reno when we first put the place on the markets. We are now at the very bottom of where we would need to be to cover the commission, and we can't afford to bring a check to closing (unless it's less than $100!). My agent has been fairly aggressive, doing lots of open houses, emailing, advertising and - most importantly - calling or emailing everyone who has been to see the property. It's been shown a lot with a good amount of positive feedback. And here's the kicker - we finally got an offer in June that would have resulted in a very little short sale (from the bank's perspective, although more than I could cover) - less than $7500. I had 48 hours to respond. When I finally got through to the right department they told me it would take 4-6 weeks to review and approve any such arrangement. So now, they're going to have to spend AT LEAST that much to foreclose on me. What gives????? I've been racing around trying to negotiate SOMETHING with these people, but the bureaucracy is overwhelming. I really don;t want them to have to foreclose, I really want to find a better way to solve this but I'm strapped - I have less than 1/2 the income I had when I bought the place. Anyway, wah wah wah wah. I really need an attorney, I think, but I can't even really afford that. Yuck! Poochie
Re: Re: Re: Which is least damaging? (BK/4clos) Would you make enough to cover the mortgage when you sold if you weren't paying the realtor's fee? If so, I suggest that you sell it yourself at the lower price(without the agent's fee). You might get a quick buyer that way.
Re: Re: Re: Which is least damaging? (BK/4clos) You definitely are trying! The last time you talked to the mortgage co what did they say? Any hopes of additional extensions with them? I just hate to see someone foreclosed on and lose all of the hard work and money they put into the house. Michelle
Re: Re: Re: Which is least damaging? (BK/4clos) Poochies, Can you refi -- have you considered it? It's not true that you'd necessarily lose it with a C-13 if not your primary residence. I did a C-13 with 2 houses (one is a rental) and 40 acres on a land contract that I intend to retire on one day -- kept them all. Sassy
Re: Re: Re: Which is least damaging? (BK/4clos) Thanks for thesuggestions guys.... I would love to sell it myself and think I could come up with the $$$ to advertise it. That's a great idea. I'll talk to the primary mortgager tomorrow to see if they'll let me try to fire sale it. The problem is getting the second mortgager to play along. Wish I'd never taken out that home equity line. I'm not sure I could refi - would anyone lend if I am so far behind? Thanks again! Poochie
