KnownOversight

Can anyone offer any advice on what's involved in filing for bankruptcy in the US?
I have a home in Florida that I'm selling at the moment, but it's taking too long and my 'pot' of money to continue paying the mortgage gets ever smaller as the months go by.
So, just as a precaution I'm having to look in to the whole filing for bankruptcy thing.
I've been reading various articles on banks 'forgiving' a portion of the money owed, and this is defiantly an option, but I just want to do my homework on going the whole hog and filing for bankruptcy.

Thanks

Mark

Elvira

You may want to post your query at the Motley Fool:

www.fool.com

BritGuyTN

you may not need to file bankruptcy

contact the bank ASAP and tell them your situation and say they meay need to forclose on you.

the downside is that is they foreclose on you and sell the house for less than the mortgage you currently owe they may sue you for a deficiency judgement

whats your loan balance/approx market value?

Scouse Express

I agree.

Get the bank in on it from the earliest opportunity, and, they will advise you on the best course of action. Bankcruptcy should be a last resort.

Jim

KnownOversight

Thanks for the reply, the loan amount is $188,000 and the value of the house has dropped from $315,000 to $200,000...which isn't too bad, but couple with all the closing costs etc we're not going to break even...

BritGuyTN

you should have minimal closing costs when you sell with the exception of a realtor commission, surely you can get a realtor to sell for 200k

how did you arrive at 200k value? is this an arbitrary figure you came up with?

ignore any recent appraisals...

speak to the bank about a possible shortsale - this is where they accept less than the owed balance as payment in full. you may have a taxable gain owed to the irs if they go for this

Michaelmike5556

before you file if you still can get credit . You could go to Vegas and take out large sums of chips exchange them for Cash then file .i knew someone that had to file cause of of lawsuit its a bit risky but it does work . least you are walking aways with cash but from what i have heard in about 7 years its like your reborn that when you will still getting tons of pre-approved credit cards in the mail . best bet is to talk to a lawyer

Steelersfanwy

There are a couple of things you could do. I have a girlfriend in the same situation. Though the laws are probably a bit different. Her foreclosure started in mid July, but she still has possession of the house until sometime in December. She can still continue to try and sell it and if she does the bank obviously can't foreclose. Which should be better for your credit.
You could also look at some of the sites that say we buy houses. Tell them what you need to break even. and see what they can do.
As for the bankruptcy your best bet is to talk to an attorney. Here they usually offer a free consultation. With all the new laws there are a lot of requirements. You have to make so much money, ect. Your best bet is don't try to go it alone.

Giantaxe

Actually, I think it's considered ordinary income as opposed to a taxable (capital) gain and so will likely be taxed at a higher rate than a capital gain would.

If I was in this situation, I would get comps from recent sales, see how much the likely shortfall from a sale would be (after taking into account all costs and a cushion for further depreciation), and try to work out how much avoiding damaging my credit record for the next "n" years is worth to me.

BritGuyTN

could well be, i know it is classed as a cash +, just not sure which kind of benefit

another option is possibly asking the bank to take a 'deed in lieu'

this is giving them the deed to the hosue back in return for them not chasing you. this is similar to a short sale, you just don;t need to actually sell the house...

Giantaxe

which is why it's difficult to convince a bank to do this:- they then end up with a property that they then have to hold, fix up and bear the cost of sale. It also damages your credit record in the same way a short sale does.