Confused: Walk away or Chap.7 in AZ

[grizzy]

First off, A big thank you for everyone who created this forum!

Heres my delima: I need/want to get out from my home that I have owned for the past 4 years. I was layed off in Oct. '08, my unemployment ends in April, I've filled out countless job apps. and have yet to become employed. I have not yet made my March payment on the 1st loan, have paid the HOA fee's for this quarter, and am not in alot of debt except for the house.
I did a refi in 2006 to a 30yr fixed from an ARM, and took a little cash out.
The details according to Zillow currently on my house:
Zillows estimated value $123,000.00
Heres the info on my refi:
My first was with First Horizon, (has since been sold to Met life), current balance is $155,296.31 @ 6.750%
The second is with First Horizon, balance of $18,499.46 @ 7.375%.
I have consulted with an attorney to inquire about a deed in lieu, but he stated that the first would probably consider it, but the second more than likely would not. He asked if I would consider making payments on the second if we did do this, but I advised that I am still unemplyed-meaning payments probably would not be wise.
His advice was to file chapter 7, and get a clean start. My total credit card debt is $3500. and I have a car payment. I don't want to loose my car or my personal belongings, and I'll handle the credit card debt somehow.
My family is wanting to help me move back to be closer to them on the east coast. I realize jobs are not much better there, but a fresh start is enticing. Is Chapter 7 my best option? How can I just walk away without the possibility of pending legal action?
Thank you for your input.

[AZChick]

First/Horizon or Metlife holds my loan, don't expect any help from them...in the literature sent to me, a deed in lieu was only available after an attempt at a shortsale, they refused to state how long I had to try to short sale before they would accept a deed in lieu.....if chapter 7 is going to get you out of everything, maybe it would serve as an excellent new start allowing you to move closer to family....

[Marc G.]

If your mortgage is an adjustable or better known as an ARM, you should look into having your mortgage documents reviewed for any infractions or violations to give you the upper hand in negotiating the shortsale.

[grizzy]

AZCHICK: Thank you for replying.
Yes, the chap 7 option will give me a fresh start-but I've never been late on ANY payment and to trash a near 800 fico has kept me up for several nights! It just morally feels soo wrong, but my nest egg has about dried up. I'm in the process of filling out the BK questionnaire, but am considering getting a second opinion before submitting this to the current attorney.

[grizzy]

My current 1st & second are both fixed rates. The original loan was an ARM, which was why I refi'd back in 2006. As for a short sale; I can look up & down the streets in my 'hood and can count many empty houses with repo signs, f'closures, bank owned, etc..so unless I sell it for $1.00....

[AZChick]

Short sale has become the new lingo....don't know if they are really making a dent in the tidal wave of foreclosures....Grizzy, I know it's hard to watch that beautiful FICO plummet but you really need to concern yourself with living day by day, you mentioned your savings drying up...what's next? I agree you should get a second opinon though...foreclosure was a good option for me but I didn't have a 2nd, perhaps you may be able to settle with you second therefore bypassing the BK? Look at all your options...good luck.....keep your chin up!

[grizzy]

Hi all, just wanted to take a minute and update my story:
I have met with 3 attorneys, 2 with the same firm: Both pushed for chap 7bk. The third was actually very understanding and seemed "human". His advice was to just pack up and move on in life. "Don't worry about anything unless you start getting harrassed. You probably won't even hear anything from the second because the loan amount isn't very much, and the first is going to assume the property anyways, so nothing realisticly would happen as far as recourse from the first."
My looming concern is taxes....going to call the accountant to inquire about that later today.
Still not sleeping, and stomach is still churning......going to the credit union today to close one of the checking/savings accounts.
Fortunately, I've got a mom who is looking to set me up in another home to get me back on my feet. I know I'll never live that one down!!

[grizzy]

Forgot to mention this; the payment on my first loan was due 3/5. I started receiving the automated phone calls on 3/17 @ 6:33pm, then 8:46pm and again on 3/18 @ 6:22pm. When the call goes into voicemail, I get half of a recorded message that doesn't even leave a name of whose calling and it just states to call 888-xxx-xxxx during regular business hours. If I wasn't smart enough to google the phone number to see whose calling, I wouldn't typically bother to return the call. If they can't tell me who to call, then why should I call?

[AZChick]

I never called back the recorded message, after 90 days late I real person called.....now I'm just getting letters....