I'm close to foreclosure on our house and down 20,000 in credit card debt. Should I let the company foreclose and then declare bankruptcy or just declare bankruptcy?

If you are going to file bankruptcy for sure, just do it now, the house can still be included.

A bankruptcy won't protect you from foreclosure if you are in fact behind on your mortgage payments. However, if declaring bankruptcy will leave you with more money by which to get caught up on your mortgage payments and keep them current then by all means declare bankruptcy. Keep in mind that it's mostly homeowners who declare bankruptcy, in order to protect that asset from being attached by creditors when other debts (such as credit cards) go bad. If you are unable to make your mortgage payments there are counseling services that may be able to help you with advice and potential solutions. But the bottom line is, if you don't pay your mortgage you will lose your home. That leaves no real asset for your creditors to attach. Of course, it also kills your credit rating so that it'll be a long time before you could even think about owning another home. And when you finally can you'll be paying exorbitant interest rates. Of course, even if you do lose your home you may still need to declare bankruptcy in order to prevent creditors from garnishing your wages and/or bank accounts.

Quote:

---

Originally Posted by rbjets69

I'm close to foreclosure on our house and down 20,000 in credit card debt. Should I let the company foreclose and then declare bankruptcy or just declare bankruptcy?

---

I had to go through both 12 years ago due to a divorce. First, a bk does not relieve you of your house loan; you need a foreclosure for that. Attorneys advise to let the house go, save a few house payments for essentials, NOT for bills if you intend to follow up with the bk say 4-6 months later; the judge looks very close to see if you've made any 'favored' payments the past 3 months or so. Depending on the state, it could be 90 day foreclosure, sometimes as long as a year. Funny line from my bk law judge when I decided to include the house in the bk. He said it would not clear that debt, and I could potentially live rent free for a year or more. I included the house because that in effect turned it over to the ex, and she could deal with the FC, which took 14 months by the way; she never would agree to sell it (she'd moved out of state then filed for divorce. In the end, the house sold for almost market value and the BK took over where the shortfall came in.
Both by the way, stay on you credit recs 10 years; though you can start applying for credit after 2, I bought a house about 4 years after the bk/fc. Just had to answer more in-depth questions during the credit interview. Took real good care of my credit and last time I checked my score (good idea to do, online even!) it averaged 822 from all 3 bureaus.