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Here is my problem.5 years ago I bouth a home which I lived in for 3 years.
(me and my husband).We refinance a home and got second (HELOC)mortage,we did a lot of repairs to the home.

In 2007 we bout a second home.We intended to sell the old house but we couldn't (market just crushed) and we owned more for the house that we could sell it for.We rented house out...we had bad experience with renters which cost us lots of money for repairs,but we were holding on with this till now.
I live in CA,work in engineering industry.Just got 10% pay cut,and my husband lost about 30% of his check.We have $40 in debt (mostly thanks to rental home + we pay $500/month from our pocked just to cover this house mortgage,taxes and insurance).We simply can effort in anymore.What is worst - renters are late on rent so we can't pay the mortage.We used all our savings!.Considering filling chapter 7 bankruptcy and need to let this nightmare house go///
What should we do?

I don't care about credit any more.I'd rather have some money saved...but what is better from taxes stand point?Should I let the house go trough bancrupsy?or it doesn't matter?

adonis · Posted: Wed Jul 29, 2009 7:30 pm Post subject:

Hi kasica,

In my opinion, you should first try for a deed in lieu foreclosure rather than bankruptcy. You can contact your lender and inform him about your hardship though a hardship letter. The lender may consider your request and go ahead with a deed in lieu of foreclosure.

In this process, though your credit rating would take a hit, you won't be responsible for the deficient amount resulting from the sale of the property. As far as taxes on the balance amount is concerned, it can be forgiven depending upon your state laws.

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Letting go rental home