Q about bankruptcy/equity LOC/advice
It's a scary proposition to think that we have to give up the house. Not that we love it, just that we are afraid we won't be able to rent anything due to the bad credit and we'll be homeless.
So the questions are:
Should we move out ASAP, quit paying mortgage, and rent something before the bankruptcy goes through (at least we won't have the forclosure on record yet)?
How hard is it to rent a house with bankruptcy on record?
Are there programs or something we can do about the LOC, some kind of program the banks offer to lessen the load. Anything we don't know about?
We had good credit up until 6 mo ago when everything fell apart. We finally gave up since the debt hole was obviously too deep to crawl out of.
Any suggestions or experiences dealing with this situation? We will see our lawyer on Wednesday but we'd like to have some ideas to talk to him about.
I completely understand where you are coming from, because I've
I completely understand where you are coming from, because I've been there myself. However, I went the route of Chapter 13 Bankruptcy, because I had the "I can't lose my house" syndrome. Call it pride if you want - it probably was at that point - but in light of all that's happened since then, I now call it foolishness on my own part. I went through 18 months of the Ch. 13 plan, and ended up surrendering the property anyway, because it was an ARM with a balloon, high interest rate that adjusts every 6 months, and could go as high as 16%. In the space of just a few years, my $540 a month house payment could have skyrocketed to an unmanageable amount. I was an uneducated home buyer and got screwed over because of my own ignorance of the homebuying process. I trusted people who said they would 'take care of me'. So I went through one bankruptcy to keep the house - and ended up losing it anyway.
I was able to find a house to rent on the Craigslist website. The landlord wanted to pull my credit report...so I took a deep breath and explained the whole situation to them. Believe it or not, they were VERY understanding, and agreed not to pull my credit report, because I told them it wouldn't be pretty - I told them all about the housing fiasco I'd been through, and they completely understood. They even lowered the rent for me so I could afford to rent the house as a single parent. All in all, I ended up in a NICER house than the one I owned in the first place. I'm closer to work for myself, and school for the kids, have a garage, and a fantastic landlord.
It can be done. However, you have to make the choice as to how soon you want to move. Here's what to consider:
-Foreclosures are at an all time high. The foreclosure process varies in length from state to state, but right now, it's taking longer than ever to run through the foreclosure process, because lenders are backlogged with foreclosures to process. I surrendered my property in January, called the mortgage servicer that owns my mortgage and let them know I was moving out - they thanked me for calling, and winterized the house to be sure the pipes wouldn't freeze, etc. I haven't heard a thing since - no foreclosure notice, no notice in the newspapers, nothing. That was almost 5 months ago. If you choose to surrender the property, check with your bankruptcy attorney on how long he thinks you will have before you have to move out. In the time that you are waiting for the foreclosure to proceed, you can live payment-free in the property. This can take months. However, again - check with your attorney and get his take on it. If you can stay in the property payment-free, you can be saving up for utility deposits, the rental deposit, renter's insurance (which is very cheap), and looking for rentals.
-Not all landlords pull your credit report, make you fill out an application, etc. But most do these days, to protect themselves. Be up front with them - tell them you ended up in a bad situation with your house, and would have lost it to foreclosure if you had not surrendered it in the Ch. 7. If you find a landlord that won't run your credit, so much the better.
When you go to see your bankruptcy attorney, talk to them about renting, and see what they think - again, it will depend on how long you can stay in your current property before you have to move.
