##(NY) Does it make sense to declare bankruptcy and surrender my home to the bank?
#Bankruptcy and Surrendering Your Home: What to Know
Struggling with overwhelming debt and the burden of a house in disrepair can leave you feeling hopeless and unsure of what to do next. If you find yourself in this situation in New York, you may be considering the option of declaring bankruptcy and surrendering your home to the bank. In this comprehensive guide, we will delve into the pros and cons of this decision, as well as exploring alternative solutions to help you make an informed choice.
##Should You Declare Bankruptcy and Surrender Your Home?
Declaring bankruptcy and surrendering your home to the bank is a significant decision that should not be taken lightly. It’s important to weigh the potential consequences and benefits before moving forward. When deciding whether to take this step, consider the following factors:
###Pros of Declaring Bankruptcy and Surrendering Your Home
1. **Debt Relief:** Bankruptcy can provide relief from overwhelming debt, including credit card debt, student loans, and IRS obligations.
2. **Fresh Start:** Surrendering your home and declaring bankruptcy can provide a fresh start, allowing you to rebuild your financial stability.
3. **Avoid Foreclosure:** Surrendering your home through bankruptcy can potentially prevent foreclosure, saving you from the stress and legal complications of the foreclosure process.
4. **Legal Protection:** Bankruptcy triggers an automatic stay, which halts creditor collection actions, including foreclosure proceedings.
###Cons of Declaring Bankruptcy and Surrendering Your Home
1. **Credit Impact:** Bankruptcy and foreclosure will have a significant negative impact on your credit score, making it more challenging to secure loans and credit in the future.
2. **Loss of Assets:** Surrendering your home means losing the property and any equity you may have built up.
3. **Emotional Toll:** Dealing with bankruptcy and the loss of a home can take a significant emotional toll on individuals and families.
4. **Long-Term Consequences:** Bankruptcy will remain on your credit report for several years, impacting your financial options for an extended period.
##Exploring Alternative Solutions
While bankruptcy and surrendering your home may seem like the only option, it’s essential to explore alternative solutions before making a final decision. Here are some alternatives to consider:
###Debt Consolidation
Consolidating your debt through a loan or a debt management program can help you manage payments and reduce interest rates, making it easier to pay off your debts over time.
###Loan Modification
If your mortgage payments are becoming unmanageable, a loan modification may be an option. This can involve adjusting the terms of your loan to make your payments more affordable.
###Sell Your Home
If selling your home is a feasible option, consider working with a real estate agent to explore the possibility of selling your property as-is or making necessary repairs to increase its market value. Additionally, a short sale may be an alternative to foreclosure, allowing you to sell the property for less than what is owed on the mortgage.
###Credit Counseling
Seeking guidance from a reputable credit counseling agency can provide valuable insights into managing your finances, creating a budget, and developing a plan to repay your debts.
##Seeking Legal Counsel
Navigating the complexities of bankruptcy and surrendering your home to the bank in New York can be daunting. It’s crucial to seek the advice of a qualified bankruptcy attorney to guide you through the process and ensure that you understand your rights and options. An experienced attorney can provide personalized advice based on your financial situation and help you make informed decisions about the best course of action to take.
##Final Thoughts
Facing the prospect of declaring bankruptcy and surrendering your home to the bank is undoubtedly a challenging situation. However, it’s essential to approach this decision with careful consideration and explore all available options before determining the best path forward. By examining the pros and cons, exploring alternative solutions, and seeking legal counsel, you can make an informed decision that aligns with your financial goals and priorities.
If you are considering bankruptcy and surrendering your home to the bank, remember that you are not alone, and there is help available. Taking proactive steps to address your financial challenges can pave the way for a brighter financial future and provide the fresh start you need.
What is your take home pay after taxes, insurance, and reworked contributions?
What are you montly required bills, the exact amount? Include everything from mortgage to insurance for home and car, car payment, utilities, groceries, eating out, deliveries, household necessities, and fun money?
Maybe list those out and see where your money is going. If you’re spending $2k/mo on fun stuff, you can easily pay off your CC debt and start making home repairs. But if 90% of your monthly take home is going strictly to necessities and zero fun money whatsoever, then you’ll need to increase your income or sell the home, potentially at a loss.
But nobody can really help until you list your take home and monthly expenses.
I don’t know that you’d qualify. Your equity in car and irs debt cancel, you can’t lose student loans, and if the house value is what you owe all you have is 15k in cc debt. With a 100k salary you might not pass the means test.
Can you sell the house and start renting? Then pay off the debt with your great income?
None of those things sound like a reason to give up on a house, you just live in it and fix it up slowly over time.
From what you’ve described I would not recommend bankruptcy.
You have normal bills and normal repairs needed.
You need someone to setup a budget for you. You don’t need to sell your house or make any improvements to it immediately.
You need to cut some expenses, perhaps make some more money. Learn to diy some repairs and deal with the other stuff later on.
Don’t mess up your credit. That gets very expensive and takes a long time to fix.
Time to seriously investigate your expenses if you’re net negative every week on $100k.
What’s the problem? You described cosmetic issues or normal wear and tear on the house? Why do the outlets need to be rewired? Have you gotten a quote from an electrician? I can’t imagine it will be more than a few hours worth of work for a competent electrician. And even at a $200/hr rate you’re looking at what? $400? $600? Is that what you’re going to file bankruptcy over? Panels and floors can wait. And if you are so inclined. Research how to do that type of work yourself. Will save you thousands of dollars. Sell the car. Pay off the IRS. Get on a repayment plan for student loans. Set up a budget. Tackle CC debt.
I would take all that free time I’ve got (cause I’m not spending a dime on anything that’s not an absolute necessity), and fix up my house bit by bit
Live in the house fix it a little at a time get rid of the car and get a cheaper one and knock the credit cards out first but don’t give up
You’re not doing nearly bad enough to give up, but you need to do better to dig yourself out.
A few things I’d prioritize:
– Credit card – cut them up and pay them off ASAP. This is always #1
– Square up with the IRS – get on a payment plan or whatever and clear that up
– Budget and lifestyle – stop doing whatever you’re doing to spend so much. Get new friends and hobbies for a while. Eat at home and keep track of your expenses. Throw money at the above bullets like you care.
The other stuff is not a big deal after that. What happened with the house? Did you trash it? What do you owe and what could you sell it for in its current state?
>The wooden wall panels are all scratched up
so? get some plastic wood filler from menards for -*$10* and then paint the walls some nice color *$40*.
>the living room floor needs to be replaced
If its wood it can be sanded and restained and varnished or it could be cheaper to have carpet installed over it, if its falling apart and you could drop a foot then its probably more than ive been able to do.
>the dining room ceiling needs to be replaced
If its soaked with water thats probably a roof issue and that can get expensive or it might just need a patch. If the ceiling driwall is cracked, it probably just needs a spackle and tape patch.
> the basement is a flood hazard
water used to go into my basement until i fixed the sump pump ($140)and re graded the outside soil level($20 +some labor) so that water would move away from my house. but a flooded basement has other issues that will need fixing, like mold and water damaged wood.
> the garage door needs to be replaced
worst case im assuming, the door is so damaged and someone drove into it so it won’t go up or down. I do lots of handyman stuff but garage door
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Owning a home is sometimes challenging. I just spent 50k in two years to fix up a house. but its been smooth sailing for this last year. it gets easier and you gain some skills for fixing things yourself. Lots of things can be youtubed.
You can sell a house in any condition, you are living proof of that.
Take baby steps and repair a little at a time.
Pics of the “problem” parts of the home would be helpful.
Sell the car and buy a cheap paid off beater. If the house isn’t condemned and safe to live in, hold off on any cosmetic repairs and get the credit cards cut up and paid off. Then just take your time fixing up the place after all other debt is paid off. Get on a budget for Pete’s sake!
Can you get a roommate?
1) The IRS are pussycats if they’re being paid. A payment plan will be affordable. If you owe them $8k your withholding is probably wrong, figure out how to get that right so you don’t owe them another $8k next year and you’re fine.
2) The house stuff is easy. The only part you can’t live with is the electric outlets, because those could be a fire hazard. Just prioritize them in your repairs budget and switch that power circuit to off in the meantime. Unless there’s roof issues, or by “flood hazard” you mean there’s already flood damage, the rest of this can be done by you for very little money.
3) If you can trade in the car for an $8k reliable machine with 50k more miles before it dies do that. Then use the car payment money for home repairs.
Time to learn some DIY home improvement
You are not close to bankruptcy. You make 100 k a year and only get rid of 53k since you won’t be able to get rid of student loans in bankruptcy.
Is mortgage payment much more than rent in your area? Sale your car and get a cheap 8k car or less and now you only have 15 k in credit cards plus student loans and possibly IRS. Get on IRS payment plan and then throw extra money on credit cards. After a year, you would just owe mortgage and student loans.
Lookup mortgage relief programs in your state. In CA we have a solid one that has helped my clients out in similar binds.
> I don’t know if I can sell the house in it’s current condition
A house can be sold in absolutely any condition. The only difference is the sale price.
Nothing you mention is unusual for home ownership.
You are making a lot of other mistakes other than what you are telling us about if you can’t make it on 100k salary.
Need more info OP
What are your expenses?
-credit card debt $15k whats the apr? monthly minimum?
-car debt $30k whats the apr? monthly minimum?
-student loan $30k whats the apr? monthly minimum?
-irs debt $8k whats monthly cost?
-subscriptions? monthly food cost? bills?
Income?
-monthly salary after the fees?
Stop spending a single dollar on fixing up the house unless it’s detrimental or a safety issue and figure out your budget.
It doesn’t need all that crap to sell it… hell YOU bought it like that, who’s to say you won’t find somebody else to foist it upon?
No. Live in the house and fix it up over time. Unless it is literally unlivable (mold, no windows), do not get rid of a roof over your head.
Your worry is your credit card debt.
Write out a list of your expenses – let’s see what you are spending
money on
This is anxiety writing this post. You’re feeling the weight of your debts and obligations. Take a breathe.
You listed out all of these debts. What you need to do is make or list out a monthly budget. How much, net, are you bringing home. What are your monthly expenses?
You have debts, yes. Nearly every American has debts. Many worse off than you without your income. You can handle this. There is equity, a lot of equity, in your home even without the repairs. Surrendering it to the bank is your anxiety controlling you. You bought the house with these repairs needed. EVEN IF you needed to part with it, you can sell it rather than surrender it.
However, I bet the repairs to your house aren’t nearly as extensive as you think, you just might not have the expertise to know they are simple repairs.
You’re feeling the weight of your debt. You’re overwhelmed by repairs you don’t understand. Breath. Make a budget. Make a plan. Start with small home repairs. YouTube videos are your friend. Home repair forums/subs are your friend.
Take it one day at a time.
If 3 outlets in 1 room are out the first in the circuit probably blew and is preventing current from getting to the others. You just need to replace that outlet if you know which it is or just swap all 3. You need new ones (might be like $12 for all 3) a screw driver and shut off the power. Watch a YouTube video it’s actually very simple to swap them out. For the flooding check downspouts of gutters to ensure they are all flowing away from the home and look for pooling water. The other issues you listed seem cosmetic and can be done one at a time.
Just sell it for any amount you can get an offer. Short sale is your option.
In my twenties I bought a house from hell. The day I moved in my foot went through the floor because of a massive termite infestation did the sellers had expertly hid.
The termites eating out around the front door so it fell out one day.
I discovered the front wall of the house was mostly consisting of toxic mold that had been painted over so many times you couldn’t see it.
Someone had been pouring grease down the drains for so many years that the first time they clogged no amount of snaking could make any difference.
I had $300 to my name after buying the house.
It took me 10 years and I just slowly chipped away at it and I got the house to an actually okay place and sold it in 2009 and walked away with $40,000 of profit. I spent way more than $40,000 repairing the house and I wasted 10 years of my life.
But now I’m almost at an expert level of drywall repair skills. I have laid at least 500 linear feet of drywall in my life.
It doesn’t sound like you’re in nearly as bad a situation as what I was dealing with. But regardless I understand it can be overwhelming.
You just got to chip away at it one bit at a time if you really want to do anything about it. The big lesson I learned is to only do one project at once. Home Depot has a series of books for DIY home repair, which are a good source of information.
Sometimes I wonder what would have happened if I had just walked away from the house and given it back to the bank. One of my friends did this with a house from hell and wound up having to declare bankruptcy and having his wages garnished and his credit ruined.
I don’t know what would have been a worse outcome or experience overall. I am now fearless in the face of home repair, but also I got 10 years of my life wasted learning how to repair a home. I did ultimately walk away with some cash in the end that let me buy a better house next go around.
I guess overall I learned a bunch of valuable skills. I have refinished multiple bathrooms, I have done a fairly large amount of electrical work, I find drywall repair somewhere cathartic, I can talk to you in detail about how to find obscure cast iron plumbing pieces, sweating copper pipe is kind of fun…. I can describe in detail the smell of termites.
You should at least put the house on the market, after all, ***you*** bought it
OP, can you share your budget? We’d be able to help more if we understand where you stand
I don’t know where you live, but where I live being able to buy *any* house on a $100K salary is pretty remarkable, and I would hold onto it like grim death. It sounds like with the exception of the water in the basement (which you may simply be able to fix with a new sump pump, not expensive), the issues are primarily cosmetic. Take some time to learn how to fix these things yourself. You will learn valuable life skills and save money.
Obviously getting rid of the car and replacing it with a beater should be your first priority. Set up a payment plan with the IRS and adjust your withholding so that you don’t owe anything next year. *Make sure you are taking advantage of any homeowner tax credits*. This is a big one that I can’t stress enough.
Stop all spending on your credit cards, $15,000 on your salary is a manageable amount of CC debt if you put effort into paying it off.
Good luck.
What about a roommate or roommates? Help offset your bills. Everyone pitches in for electricity, internet, water? Use the money to pay off the credit card debt. You are probably paying 300 dollars a month or more in interest alone there. That’s silly.if you can get 1000/month in rent you can shove that all on the credit card and have it paid off in 15 months. You need to budget. Cook at home. Rice and beans are nearly free. You can pay off the car next. Pay it off with that 1000/month. It better be a toyota or Honda and you need to drive it forever. Keep it maintained. Payment on a 38k car is probably in excess of 800/ month. If you aren’t upside down you could sell it and buy a 10k used car with a 200/month payment. Something like an 80000 mile AWD Rav4 would work for New York snow. Autotrader has a 2011 one right now.
Get a second (& third job,if you have the time).
Pay down cc debt.
Sell car, buy a Toyota beater.
You’ve brought this upon yourself. BK is not a good idea here
Sounds like you need to start a budget. List everything out and analyze your expenses column. That amount of debt is not bankruptcy worthy imo.
I would say that you need to prioritize the list of repairs that you have. Start with safety hazards and then work your way down to cosmetics. Take care of your credit cards first though.
Also, see if you can DIY some stuff yourself. Does the dining room ceiling require detail work or replacing beams? Is this the result of water damage? If it’s just a flat ceiling with good beams, you can probably manage the drywall/painting part yourself to reduce cost. If it’s water damage then the source of it should be your #1 concern to fix.
Why are you replacing the outlets? Is the wiring old or exposed? If so, then it’s higher on the list. If they just don’t work but isn’t a safety hazard, it can wait.
The basement is a flood hazard? Get a shopvac. See if there’s a sump pump.
The garage can wait indefinitely. Sure, you’d like it to work, but there’s nothing wrong with parking outside in the driveway.
Floors and paneling. Are these in good condition? You may not like the look, but if there’s no wood pieces broken/splinter risk, then just hold off until you save enough money. If there is a splinter risk, just sand it for now.
Every homebuyers first year is fraught with expenses. You need to re-evaluate your budget and set aside a certain amount every month for various repairs/maintenance.
Why did you buy the house???
You need to slow down on the repairs. None of those repairs sound particularly catastrophic. Get the outlets fixed or tape them off so they can’t be used. Buy a sump pump and replace the one that is there if you’re worried. The house isn’t going to fall down just because you moved in. Take your time and breathe.
what’s your mortgage-what are you spending your money on-drugs? gambling? what?
You can sand down and paint the wall panels, put down LVP on the LR floor and wait on the rest of the stuff.
You are making poor financial decisions impulsively and need to not compound it with bankruptcy-figure out why you have no money-are you upside down on the car?
You could sell the home as a fixer upper. Hopefully you didn’t over pay for the house.
100k a year is alot of money. Double what most people make.
Need a lot more information. Whether or not to file bankruptcy is a fact and goal driven decision.
1. Rent out the car Turo or monthly base.
2. Talk to real estate agents. You can make a deal, you sign a contract, they pay for repairs, you sell it, they get their cut.
3. Credit cards, you can talk to them to freeze account so you don’t get any interest added anymore and make a payment arrangement or you can use debt relief programs. Each of these better than bankruptcy.
I think these steps might help you.
Negotiation and talking to people resolves toughest problems
What county? I’m looking for a fixer upper
Talk to a HUD approved home counselor if you feel like you need to get rid of the house or can’t make payments. Foreclosure is a bad idea. You could do a short sale, possibly a forbearance, bank may even let you turn it into a 50 year mortgage. You have options.
https://www.consumerfinance.gov/ask-cfpb/if-i-cant-pay-my-mortgage-loan-what-are-my-options-en-268/