Help - advice needed - how to walk away

[john_smith73]

HELP! HELP! Please somebody help me!
Three years ago I was completely debt free. Then I bought my house at below the market value – 165K. It appraised 180K the day I purchased it. Then I used credit cards to do some home improvements, hoping that the house will appreciate. Since then I refinanced several times. As a result I currently owe 192K on my first mortgage, 46K on my second (it was high LTV –115% loan), and have 25K on credit cards. Nine months ago when I last refinanced my house appraised (with a push) 200K. Since then the houses in my subdivision went down about 10%. So, today my house is worth less than 185K (optimistically), and is going down about 1% per month. I am current on all my bills. My FICO score is about 800. But I barely hang on. My employer cut off bonuses, froze the salaries, and with the last price hike, I am not able to make it any more. Try feeding and clothing 5 people with 500/month! This house is too expensive for me. I am not looking for a short-term solution. I am very stressed out. I do not think I am able to do a short sale. So I am thinking about walking away. But I am afraid that I will get deficiency judgment. I have no assets. But I do not want them to garnish my pay for life.
I live in Missouri. My second mortgage is with Homecomings Financial.
My plan was to find a place to rent when I still have good credit. And then to stop paying for my house, and wait for the foreclosure. I do not want to talk or communicate with any of my mortgage companies. Can Homecomings Financial sue me on the note for the deficiency? And if I move, will I receive the certified letter about the judgment? I’ve heard that they have 10 years to do that. How will I know if they decided not to sue me?
I need to file a bankruptcy after they send me the letter, but before the actual judgment, correct? I am so confused. What is the timeline? My wife works part time, making $300/month. Shall I just ask her to quit, if I am preparing for the bankruptcy, since my income is just the borderline about the means test? And what if both mortgage companies sue me for deficiency? When should I go to bankruptcy? How long does it take to receive the deficiency judgment after you stop paying? If I do not get sued, I will not file bankruptcy, and just pay my credit cards, even if it takes me some time.
I already contacted two bankruptcy lawyers. They told me to walk away first, and then if I get sued, I have to file a bankruptcy, but if I leave the house I may not qualify for chapter 7. I really do not want to go into chapter 13, and 5 years of repayments.
What shall I do? Please advise! What is the name of your state (only U.S. law)?

[FlyingRon]

Yes either the first or the second can pursue a deficiency judgment if they are not satisfied.
The lawyers are right. Further, unless fraud is involved, an unsecured judgment can be discharged in a bankruptcy

[TimStudiesLaw]

Walking away is a mistake.

You have a great credit score, and are making ends meet - although not as comfortable as you'd like. The only thing I saw was that you are upside down in the house.

Maybe a part time job for you or have your wife pick up a few extra hours can ease the pressure for the short term. In the long term - wage freezes thaw, and the real estate market will come back.