Q: I am unable to sell my old house and it is about to go into foreclosure.
I was unable to sell my old house because we owe more than it is worth. I decided to rent it out to avoid foreclosure despite having a clause in the mortgage saying we cannot rent it. Two years later we are in the process of evicting the tenant because he is always late with payments and is now 3.5 payments behind. The next payment I miss will now start the foreclosure process. The house and mortgage is in my wife's name only and her credit has been negatively affected for the last two years because we have never been able to catch up on payments. We are probably not going to be able to going to be able to get a new tenant or money together to avoid foreclosure unless my tenant pays me his back rent. I really don't want to deal with this house any more. Should I just get the current tenant out and let it go into foreclosure? What other options do I have?
A: In the vast majority of foreclosure cases, the question is not whether the Mortgagee noteholder will when, but when. You say the property is "my old house", but that your wife now owns it. You do not, however, say when that transfer of title occurred, nor what money or other value exchanged hands at the time of the transfer. Nor do you say whether you remain personally liable on the Mortgage Note. If the Mortgage holder has not removed you from the Note, your credit rating will suffer as a result of the Mortgage default and foreclosure, and probably already has.
A chapter 13 bankruptcy was primarily designed "to keep the house", although that usually means the family residence, not a rental property. You should speak to a bankruptcy lawyer without delay, give him all the details concerning the house and your financial condition, as well as your wife's. There are eligibility limits for a Chapter 13 bankruptcy, with debt limits. Most probably, the filing of a chapter 13 bankruptcy, either by your wife alone, or by both of you jointly, is going to provide the best solution for your stated problems.
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