Keep or Include Home in Chap 7 BK

[missy42]

 So I have a question concerning my home and if I should keep it out of Chap 7.  Originally I was going to include it, kept payments up decided to keep it, now I'm back at square one and not sure what I should do.

Here are the particulars:

Closed on my home in 2015.  Received Escrow shortage first year of $57, fast forward, my mortgage lender send me an Escrow shortage this year (first year is just the land, this year they failed to include the increase for the actual home in the analysis, therefore I end up with $2149.22 Escrow shortage).  I am waiting to file Chapter 7 due to health issues I am no longer able to work.  Stopped working in Oct 2016, will file once 2016 Taxes are complete.  Disabled Veteran and living off VA disability and retirement.  Was going to keep the home but would have to pay $2149.22.  My original mort payments are $1007.15 monthly.  If I pay the $2149.22 mort still goes up to $1153 per month.  If I don't pay it goes up to $1342.23 per month.  

Needless to say I'm waiting to file Chap 7 I'm in FL have lawyer.  County appraiser valued the home $46K less than what I paid.  Just not sure if I should keep the home or include in Chap 7.  I know ultimately its my decision but would just like input.  Also currently paying IRS for 2013, 2014, and 2015.  2013 will be included in BK.  Installment agreement is $125 a month for $8788.  Will probably owe this year 2016 (worked until October) therefore if I decide to keep house I will need to ensure my taxes even with installment agreement is below $10K otherwise lien goes on the home.

I paid $193K for the home, it's a VA loan at 4%.  If I include the home I'm moving out of state but will remain in home until right before foreclosure.  If I don't include the home I will probably still move but rent out home as I tried to sell before and only got low offers.

My lawyer seem to think it's best if I include the home since I really don't want to be in FL and not sure I want rental property due to hurricanes.  

Any advice would be greatly appreciated.

[StartingOver10]

---

@missy42 wrote:

 So I have a question concerning my home and if I should keep it out of Chap 7.  Originally I was going to include it, kept payments up decided to keep it, now I'm back at square one and not sure what I should do.

Here are the particulars:

Closed on my home in 2015.  Received Escrow shortage first year of $57, fast forward, my mortgage lender send me an Escrow shortage this year (first year is just the land, this year they failed to include the increase for the actual home in the analysis, therefore I end up with $2149.22 Escrow shortage).  I am waiting to file Chapter 7 due to health issues I am no longer able to work.  Stopped working in Oct 2016, will file once 2016 Taxes are complete.  Disabled Veteran and living off VA disability and retirement.  Was going to keep the home but would have to pay $2149.22.  My original mort payments are $1007.15 monthly.  If I pay the $2149.22 mort still goes up to $1153 per month.  If I don't pay it goes up to $1342.23 per month.  

Needless to say I'm waiting to file Chap 7 I'm in FL have lawyer.  County appraiser valued the home $46K less than what I paid.  Just not sure if I should keep the home or include in Chap 7.  I know ultimately its my decision but would just like input.  Also currently paying IRS for 2013, 2014, and 2015.  2013 will be included in BK.  Installment agreement is $125 a month for $8788.  Will probably owe this year 2016 (worked until October) therefore if I decide to keep house I will need to ensure my taxes even with installment agreement is below $10K otherwise lien goes on the home.

I paid $193K for the home, it's a VA loan at 4%.  If I include the home I'm moving out of state but will remain in home until right before foreclosure.  If I don't include the home I will probably still move but rent out home as I tried to sell before and only got low offers.

My lawyer seem to think it's best if I include the home since I really don't want to be in FL and not sure I want rental property due to hurricanes.  

Any advice would be greatly appreciated.

---

Stop!  You are going on bad information.  The county appraisal valuation for tax purposes is always much, much lower than the actual market value. Before you make a decision to file Bk, sell your home.  In Florida (I'm a Fl Realtor) the 'general' valuation of tax value to market value is 80%.  Certainly, it varies from home to home due to condition, location etc, but do NOT use the property tax valuation to determine the value of your home.

There may be plenty of value in your home to pay not only the increased property tax bills, but the other IRS debt you have without having to have a Bk on your record. 

Also, paying off the VA loan will be a very good thing in your favor.  

Also, all assets and debts have to be included in the Bk.  The issue is whether you intend to keep the house or not.  If you are moving out of state, that is another good reason to sell the home. 

I am really stunned the bk attorney failed to inform you about the differences in market value between the tax assessor's office and actual market value.

Call a couple of good Realtors in your area and have them give you a market evaluation so you have accurate facts.  Don't use those automated valuation type systems either. Have the Realtor come out and show you actual comparable sales in your neighborhood for similar homes.  The entire Bk may not be necessary if you are able to pay off the property taxes, the mortgage and some or all of your IRS debt.  

[missy42]

Hi StartingOver10,

I'm not going on the valuation from the county only.  I just want a fresh start and feel that with all my other debt (not including the house or car) $133K that if I include the house it will help ensure if it sold for less I would not have a deficiency.  Right now where I am in FL the homes are not selling in my area at a high cost.  I paid $193K and when I did put it on the market for 60+ daysI had no offers.  Most of the homes sold for about $198K some less.  The one that sold in my neighborhood for $202K was a 4 bedroom mine is a 3.

I understand that a BK is not the best thing to do but it will allow me the fresh start I'm seeking and relocating out of state allows me to start over. 

This is not my first BK, it's just been a while and I never thought I'd be in this situation.  While I do understand paying off the VA mortgage would be great, I realize wiping out all this debt and starting will be a lot less stressful.

Thank you for your input, I really do appreciate it and have considered all options.  I'm still making up my mind.  My BK attorney has been very good about explaining everything to me I just always like to ask the forum as it allows me to ask questions I may not think about when I talk to him.

This is a hard decision but with the debt I have I think a Chap 7 and not keeping the house might be a better outcome for me. Thanks again!

[StartingOver10]

I see your dilemma now with $133,000 in debt, not including your mortgage. That is information I didn't know. I am glad your attorney is explaining everything to you  - that is the sign of a good attorney. 

I am surprised about your home not selling, but it depends on the time period too.  In Florida Sept is the slowest month of the year and if your home isn't sold by Nov 15 (more or less), then it is unlikely to sell until the new year. These are general rules of thumb and not set in concrete  

Now that I have a better idea of your debt, I understand that Bk may be your solution. I'm sure you have discussed the options with your attorney. Good luck with this filing. 

[missy42]

Thanks StartingOver10,

Yes with the other debt, BK 7 is my best option but I really do appreciate your response.  Kudos to you!