Home Forums Hunting & Shooting Hunter's Campfire Questions About Home Loan Foreclosure & Bankruptcy

If you owed 30k more on your house than it was worth and you let it go back to the bank through a foreclosure and say the bank sold it for 75k less than you owed would you still owe the difference between the payoff and the selling price in this case 75k or would you have to file bankruptcy to get away from it.
Also is it true that if you make more than 50k a year and you file for bankruptcy you still have to pay the money back

If you have a speck of honesty in your body, you'll pay it back even if you make 5K a year. Bankruptcy is legalized theft.

You will get a form 1099 for 75K from the bank and that money will be considered ordinary income by the IRS. Bankruptcy will not protect you from the IRS.

If the house breaks in two, you still own both pieces, and owe the mortgage.

Sometimes the lender will consent to a "short sale". A common setup is that you don't go through bankruptcy, and don't default on the loan. The lender sells the house for what it will bring, and forgives the rest of the debt.

It's all a very ugly experience.

I can't help you Tack. I have never been in that sort of situation.
When I bought my bome here three years ago, we bought about half the house we qualified for. We put down 25% cash, and we make double payments when we can,. I never put less than a couple of hundred extra bucks on the monthly payment.
No credit card debt, and only a very small payment on a new car.

I never understood why folks get themselves in these credit fixes in the first place.

I am not sure what is going to happen yet but here is some background information to maybe help you understand how someone gets this far behind and I know that it is morally wrong to walk away from it or I would have already walked.
We bought this house 14 years ago. A few years latter my wife's job ended. We took some of our equity and used it for her to go into business on her own. that business failed and she went to work doing what she loved - working with kids the only problem was that she was now making half the money that she was before she lost her job and in order to stay afloat we took the rest of the equity and consolidated some bills and closed the business. There are 2 homes that have been for sale on my street for over a year for 35k less than we owe on ours. I am paying taxes on a 185K house that is worth 140 to 145 and I do not see it ever getting any better The schools are dropping in quality a lot of the apartments in the area are going section 8 housing allowing a lot of trash in and this is dropping the value even more.

any way to get a rental unit in your house? it isn't hard to do and not that much money depending on the style of house.. i dont know the specs on your house or zoning issues but it could help..

can wife do a daycare at home? tough spot... your not alone if that helps....

woofer

well it's plain now what the best course of action is


as it turns out, it's the wife's fault, she's only making 1/2 the income she did before.


so it's up to her to convince her best looking girl friend to become your second wife and move in with the 2 of you!

problem solved! (cause you'll be dead after you bring it up anyway, grin)


all the bs aside, wish you the best of luck sir, later on in the day I'm sure some of the smart cookies that frequent this board will see this and be able to offer you some good advice.

in the meantime, you have us smartazzes to help


but do remember this, "this too shall pass" we need to remember that during both good and bad times.

Both you and your wife need to get 2nd jobs to start digging yourself out. If both you and your wife worked at Taco bell part time, you should be able to pay the mortgage.

This was discussed on a radio program I was listening to, this is probably a good action plan to start. Hope things turn out as well as possible for you. I made my living buying companies out of bankrupcy, this is NOT going to be a plesent experience.


http://homebuying.about.com/od/4closureshortsales/a/shortsalebasics.htm

You can appeal your taxes your self, get comps of sales for like kind houses and make them adjust your assessed value down to market. I did it by myself about 15 years ago when I bought my house in the last recession, then 3 years later an accounting firm sent me a form letter stating that they would do an appeal for 50% of the first year savings. I figured what the heck and let them and they saved me a couple more hundred bucks. You can google up info on how to appeal your taxes yourself.

debt forgiveness in bankruptcy is not income under the tax code.


And bankruptcy is not theft. The founders specifically wanted a national scheme to deal with insolvencies, that's why its in the Constitution. That's why they forbade debtor's prison. TJ, particularly, was on the edge of bankruptcy most of his adult life.

There are some cases where circumstances cause a person to not be able to pay a debt. However, bankruptcy is used far to often to just avoid repaying debt. For example, a friend of mine started a handyman business a few years ago. He did a kitchen remodel for $16,000. He paid for all the materials and spend a couple months on the job. The day after he finished, he went back to get his money and the woman handed him newly filed bankruptcy papers. He lost it all, including his entire business. She knew far in advance what she planned to do. And you say that isn't theft?

I know another kid who's about $20K in debt on various things. He wants to buy a house but has no credit rating. He's considering bankruptcy to get out from under what he's run up on credit cards, car loans, etc. He borrowed money and promised to pay. Now he wants to keep their money. That's theft.

both the examples you give are bankruptcy fraud.....and the aggreived party could have their debt declared non-dischargeable.


the first example also would have a lien on the house where he did the work, which survives the bankruptcy.


you might want to look at 11 USC 523 and 727, which cover most of the issues you're talking about.

Just for general information....

When someone owes you money, you can file a "financing statement" with the state. Often, that is just a copy of the contract, or a signed agreement from the debtor that the money is owed.

Once you file a financing statement, the debt becomes much more collectable in case of STF.

Anyone doing something like a major remodeling job should routinely file a financing statement.

Now, in the case of the upside-down house... People can and do get into impossible situations through no fault of their own. Bad things happen to good people.

I've never declared bankruptcy (or taken a dime of unemployment) and don't ever plan to.

Never having been in a situation where real help is needed, it's easy to sit back and cast judgement. What's YOUR experience with bankruptcy and for that matter, unemployment (another big gimme)??

The reason I ask is I've seen good people suffer serious financial difficulty and bankruptcy was god-send for those folks. I do think a lot of f'heads abuse it but I'm glad it's there.