Keeping your home or should you walk away?

As a bankruptcy attorney I am constantly counseling clients on the pro and cons of retaining property.    The current state of the economy and the real estate market are not only bleak but chaotic and unpredictable as well.   The loan modification promises of the past two years have failed miserably and as a result many consumers, rightfully so, have no faith in the mortgage companies promises or trial modifications.

While I understand that the decision to walk away from your home is an emotional one consumers need to really look at the cold hard numbers when assessing the best game plan for them moving forward.

I have comprised a list of 5 factors to consider when deciding whether or not to let your home go or fight to stay in your home for recovery:

  1. How many mortgages do you have on your home?  In Georgia, most first mortgage lenders will NOT seek a deficiency judgment against you if you decide to let the property go BUT junior mortgages will come after you for any balance not recovered from a foreclosure sale.

Something to note however is that if you are forced to file  bankruptcy you may be able to remove second and third mortgages which may put you in a situation to have equity in a year or two.

        2. Is your current mortgage payment less than what you would pay for rent in a similar home?

We all have to have a place to live and in the end if you are paying less where you are currently are than what you would pay  to rent in a similar area and home then as long as you put it in your head that you really are just renting since you have no equity in your home you may want to stay in the home for the time being.

I have several clients who love their school district zone and/or neighborhood and tell me that they could not rent for less.  If this is the case then you may want to stay put.  You cold be looking at a LONG time recoup any equity in the home but as I said, you have to have a place to live.

       3.  Do you think you will regain the equity in your home in three years?  While the real estate market is not coming          back anytime soon there are signs that it is SLOWLY climbing back in some areas.    If you think that you will at least have some equity in 3 years it may be worth it hang on to the property and enjoy the interest write offs and again you have to have somewhere to live.

4. Can you afford your current mortgage payments and home maintenance?  If you cannot afford your home any longer and modifications have failed then you need to let the property go either by short sale or foreclosure.

Many of my clients are facing foreclosure due to job loss, illness, or divorce.  Before you decide to go one way or another you should sit down with a good bankruptcy attorney who can provide you options and let you know if you would even qualify for bankruptcy if the need arose.

Unfortunately I meet with a lot of people who got bad advice from an aggressive real estate agent or attorney and ended up making money for everyone but themselves.

foreclosure georgia

Is your home worth fighting for?

    5.  Are there any co-signers on your mortgage loan?  How this will impact a close friend or family member is also an important factor to consider.  A co-signer can be held liable for the entire note and this is also a very important factor to consider when deciding your course of action.  No one wants to ruin their spouse or mom and dad’s credit so these repercussions need to be taken into consideration when deciding which course of action to take.

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