Our home is our only debt

[larryprg]

What is the name of your state (only U.S. law)? Nevada

We are considering a bk to relieve our only two debts: a $200,000 1st TD and a $25,000 2d TD (both acquired at the same time from the same lender).

We are currently in this new home in a development where in the past year, identical homes have sold or are selling at $85,000-$99,000. The mortgage holder refuses to deal with us and we will leave the home when finally told to do so. We have not made a payment in almost 12 months.

I've been told that the 2d TD cannot be discharged because it is a secured loan, but it was secured with equity that doesn't exist and will not exist for a very, very long time into the future.

I may be wrong, but I'm assuming the 1st TD debt goes away with the transfer of the home. What is the possible debt status of the 2d TD?

[FlyingRon]

You should keep this all in the same thread you already started.
The answer isn't any different over here than what I told you there.
Bankruptcy would be a pointless exercise if you don't have any unsecured debt.
Bankruptcy will not wipe out either of the obligations from the secured loans.

Foreclosure wipes out the security of both notes.
The notes still exist but they will have to persue a deficiency judgment to recover anything from you.

Let them foreclose if you can't pay. If they manage to get a deficiency judgment then you can consider bankruptcy.

[larryprg]

Thanks again Ron,

I obviously was thinking that the bk and mortgage were separate problems.

You've helped me tremendously by helping me better than anyone else has that they are not separate and this answer pretty much finalizes the issue for me (until we get into the bk, if that's necessary).

I certainly appreciate your help.

[bigun]

Thing about waiting is, do you qualify for a Chapter 7 now? In the future, your income may rise and you may have assets that may make a Chapter 7 impossible.
Not saying rush out and file. FlyingRon makes a good point about waiting and seeing if anyone pursues a deficiency balance.

Just giving you something else to consider.

[larryprg]

Right now, both of us are only working part-time and we don't have any assets other than our autos, which are low market value. None of that looks like it will change much in the next 1-2 years, but when the economy ramps up again, we should be fine.

A bk is probably inevitable (and soon), because I don't see the mortgage holder just writing off $150,000 because we're judgment-proof right now and we need to protect our future (and sanity).