Foreclosure

[Brian]

I'm facing foreclosure, it's been 4 years and the house is not selling on the market and I haven't made a payment in that about of time. I have however payed my credit card debt down from $20,000+ down to just under $5000. I don't want to file bankruptcy but I can't pay back the loan on the house. I see bankruptcy as my only option. Any advice??

[Driver]

You should probably seek advice from a local financial adviser but in most states you can give up the house in foreclosure without having to go bankrupt. In a few states you retain personal liability for the difference, so for example if you owe $250K on the mortgage and it goes for $150K at auction you can be sued for the $100K difference. That's only a few states though. I would strongly recommend you seek advice from a local financial adviser because foreclosure looks a lot better on your credit report than bankruptcy does.

[4jacks]

Hi Brian,

Welcome to the boards, thanks for reaching out.

The first thing you need to get is get on a financial plan. I really recommend either Dave Ramsey or Crown Financial. You are going to need a strict budget, you need to know where every dollar of your money is going. Just looking at the numbers you've posted, it seems like keeping track of your money has gotten away from you.

Step one is always Save $1,000 for emergencies.
You however are approaching an oncoming emergency of being evicted. So Save every dollar you get.
Stop paying your credit cards for now. If you are not paying your house, then your credit is already trash. This will make the credit cards call you a whole lot, and they can be very mean. Sending them $10 a month may keep you off of thier call list.

Are you trying to sell the house with recourse, or without recourse?
A short sale with recourse, means they sue you for the balance of what you owe.
A short sale without recourse means they don't sue you, and the bank loses that money.
Either way, if it has been on the market for 4 years you need to drastically reduce the price. I also find making the house as empty as possible helps the house show well and sell. Even if you are living there still, take everything off the walls, remove all the clutter, let people see open space and big rooms.

Are you still holding down your job?
are your cars current?

I'm sure I don't need to point out the obvious, but you haven't made a house payment in 4 years, you should be able to use that money to get everything else in great shape, save money, pay off debts, etc. then deal with the foreclosure. That is history, but looking forward, you may still have another year rent free.

Bankruptcy shouldn't even be in your vocabulary until everything is settled, If you declare bankruptcy in the middle of the mess, more of the mess is going to pop up and you wouldn't have done yourself any good.

[Brian]

Thanks guys, I am doing Dave Ramsey's plan, not 100% but other than the house it's working for me. I talked to a lawyer today and he told me to tell Chase that I want to deed the house back to them. He said they are required by law to do this as long as I can prove I can't afford it.

[4jacks]

I don't know man, doesn't seem like a good option to me:

http://www.ehow.com/how_4866264_quic...back-bank.html <--- Point #4

Basically, instead of YOU selling the house. The Bank will sell the house and sue you for the difference. I would think that you could do a better job then the bank.

[clydewolf]

Brian,

I agree that you must have your asking price too high.

But as the debt being forgiven, you may find this item of Home Foreclosure and Debt Forgiveness useful.
http://www.irs.gov/newsroom/article/...174034,00.html