I am unemployed and was denied unemployment benefits. I have no money at all coming into the household, 2 sons, 1 of them only 6 months, the other one is 5. I am 2 months behind on mortgage payments as well as credit cards. (I am over $30k in debt for the credit cards and in an upside down mortgage). I have been unemployed for 6 months now, and have already done debt counseling but had to stop that since I could no longer pay it as well. I even withdrew my 401K to get caught up in payments 2 months ago in the hopes I would find work but now, but that hasn't happened. Should I file for chapter 7, try to short-sale first, or are there any other options? How long can we live here without paying any mortgage? The house has lost over $30k in value since we bought it 4 years ago and we sunk around $20k into it. The house was a big mistake in the first place, lousy neighborhood, neighbors, property has lots of problems, and we cannot afford it anymore. It's only in my name and not my wife's so ruining my credit is not a problem at this point. I cannot find work, and need to take care of the kids first. Any advice is appreciated. It also seems that $1,500 is the going rate to file for bankruptcy? Is that just a flat rate and why do other lawyers charge different? Isn't it as simple as filing the necessary paper work and appearing in court?
Submitted by Anonymous on Fri, 11/28/2008 - 19:30
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Editor's Response
I am sorry about your tough spot and more sorry that this (bankruptcy) is not really my specialty. I think you should contact a bankruptcy attorney asap. Many of them offer free initial consultations, and that will give an opportunity to gather information about your options. Given that you have no income coming in, and no way to pay off the secured debt, it sounds like chapter 7 will be your best bet.
As for the house, short sales are tough because you need to have a bona fide offer and, in this case, convince the bank to accept a sale for less than the amount owed. Not impossible, but difficult.
Typically, a foreclosure can take many months to complete, so hopefully you still have some time. Good luck.