[petunia1729]

My daughter has had to make a decision about losing her home of ten years. She is single and has a three bedroom brick that she thought would be a beautiful place to raise a family. At 36 she is still single and every dime she makes goes into that house. Last year, she lost her 40 hour a week job. She picked up another in her field, but the damage was done as far as her credit. She put the house up for sale and it sat! She took it off the market after 4 months, but it's a genuine realization that she can not afford it and she cannot afford to refinance either. The home is mortgaged up almost to it's limit. She is suffering from major depression--has been most of her adult life and this situation is not helping matters. I want her to try to sell it one more time and she wants to just walk away from it. She has agreed to let me see which would hurt her worse... foreclosure or bankruptcy. I'm afraid that I do not know much about either and the long term ramifications. She is currently living with me and she has turned off her phone--uses her cell--satellite and other things that she does not need and kept the basics on in the house. Recently, we had some women who were interested in renting it for her house payment---thinking that this would give it time for the market to get better, we thought it a good idea, but they never contacted her again. We are at a loss of what to do.

[nicespringgirl]

I see your situation. So what price would her like to sell her house or she still wants to keep it?
Thanks

[ScottGem]

You can't "walk away" from a house. If the house is subject to foreclosure, then the bank takes it, sells it at auction and your daughter is still liable for the remaining balance. With bankruptcy, at least she can keep the house and work at getting her financial house back in order.

One thing you can investigate is a short sale. With the recent housing market downturn, lenders seem more willing to accept this. What basically happens, is the lender allows the owner to accept a sale for lower than the mortgage balance. The difference is then forgiven and charged off by the lender. They then give the owner a 1099 reporting the forgiven amount as income that the owner will need to pay taxes on. But that's better than a foreclosure or bankruptcy.