Going through Foreclosure, should I just file BK?

[overallthisbs]

Hello all, our situation: we are eventually going to foreclose on our house, we are underwater, house is worth 1/2 of what it was bought for in 2005, $0 down on the house, very little $ into it, we bought with purchase money so we are able to walk away scott free.

the issue I have is that I have been unemployed 2x in 2008 and have not found work since sept. of 2008, we are now living off of 1/3 of what we were bringing in as income, my wife works but I was the main wage earner. I had back surgery and my wife was out on disability during 07/08 due to pregnancy complications. We are now in 50k of CC debt.

My main question is whether or not we should just file for Bankruptcy and wipe out all of our debt? Leaving the home will help some as out rent surely won't be as much as the house but I would like to figure out how much worse a full BK on my credit report is vs. just a foreclosure. There is alot of misleading info out there, so it is confusing. I am thinking that if BK is only a bit worse than a foreclosure, then it might make sense to just do the full bk and be done with the CC debt as well and start fresh. I am fairly surely that our 401k assets can't be touched, and that is about the only thing we have left besides general household stuff, which I am not sure what of that they can take?

any advice appreciated, specifically on how much worse a BK is for your fico score than simply a foreclosure.

keep in mind that before all of this we both had stellar credit, in the high 700's, I have heard a foreclosure will drop my score 200 points automatically, how far a drop is a BK?

[overallthisbs]

I have been reading posts on the internet, but many are from lawyers that tout bk is actually better than foreclosure? it seems that bk lawyers want to push bk, it would be nice to find somewhere to get unbiased opinions / info.

[Haggerty]

Was in same situation -- foreclosure vs. BK. We had poor credit already so it seemed that if we were going to take the foreclosure hit anyway, we might as well clean the debt slate as well and really start fresh. The question for you might be whether you expect to rely on credit, or buying a house quickly, in moving forward. If not, try to detach yourself emotionally from your credit score, and recognize that lousy credit is not the worst thing in the world (my husband has Alzheimer's, so I can tel you from experience there are FAR worse things in life than a low FICO). Also, you can also put a note in your credit report after the BK explaining that the family's financial collapse was caused by serious medical crises suffered by each you and your wife and that your foreclosure and BK were not the result of a pattern of financial irresponsibility, but rather, the unexpected and extraordinary expenses of two medical catastrophes.

Lots of people lead a good and normal life with lousy credit or no credit. Don't let fear of FICO keep you from taking advantage of what the BK option is all about -- a fresh, clean start. Good luck!

[overallthisbs]

well, looks like BK7 is not an option right now, we are on the cusp of being eligible and some other issues because of CC charges I have made in the past few months, stopping use of CC's now and paying cash for everything, he said to give him a call in a few months and see if we will qualify by taking a means test.

I think overall we are just going to walk, take the FC hit and pay off our CC's. It is easier as BK7 seems like it is going to get complicated. But we will revisit things in a few months with our lawyer.

Yesterday we got a letter from ALS basically saying that there are no home retention programs we qualify for, said we don't have the income to pay back the loan, which is BS. They just aren't even trying. Funny thing is that a day earlier they sent a certified letter saying that they could not contact me, which is BS, I have spoken with them several times and when they call my home #, I pick up and nobody answers, this letter said that I must call them asap to work with them on a home mod, then a day later they send a letter saying I don't qualify. It is my feeling that they are probably trying to cover their ass by doing all this, that way they can say they tried. I am convinced they simply want to foreclose at this point. And that is fine. We want to stay here but our home is 1/2 of what we bougt it for now. My 2nd is variable, my 1st is fixed at 6% until 2010 and then adjusts and becomes variable, it will probably initially be lower but I am not comfortable with having a completely variable loan on a home that is 50% underwater. The gov't rate is now 0% but eventually they will have to raise that due to inflation, which I believe is just on the horizon and then we will be paying much more monthly for a home that we are completely underwater. What is crazy is that it is not the short term that scares me but the long term here. Higher rates, inflation, etc and all at the same time owing top 2005 dollar for a home. Plus come 2012 I won't be forgiven for the tax deficiency.

I just don't understand why they won't even come to me with ANYTHING. Not even, hey here's a 4% fixed rate for 30 years, then we could at least plan for the future a bit. But they want to do nothing, crazy.

sorry for the rant, and thanks for all the help. Hopefully we will get to stay here a bit longer.

[bluemoon]

Hi all,
After 4 months of trying for loan mod with cw/boa finally offered a bad loan mod. We will try for short sale then foreclosure, concern is home is a refi with a 2nd heloc of 47,000.00. Can banks go after 401s and any other income? Is that the point of bankruptcy, to shelter other assets?
I am in Oregon. Need to find good attorney for advice.

Thanks

[overallthisbs]

yes, you need to find a good attorney, no idea what the laws are in oregon, they can't go after your 401k, those are protected assets, at least in CA. The laws for foreclosure vary by state, so do your research, much of it is easy to find on the internet with some good searching. good luck.

[bluemoon]

does anyone have recommendation for lawyers in oregon?

[Moe Bedard]

bluemoon,

For a referral, you would need to go to the Lawyer Referral Service at the Oregon State Bar Association

Lawyer Referral Services


or you can check

National Association of Consumer Advocates – Consumer Protection Advocates and Attorneys