I own a home in IL, which I lived in for 5 years and have rented for the last 3 years...it has been vacant since November 2010 I am curren...

Question

I own a home in IL, which I lived in for 5 years and have rented for the last 3 years...it has been vacant since November 2010 & I am currently renting a home as my primary residence in another town but cannot continue to pay both a rent & mortagage...I'm having trouble renting my property to a good, reliable tenant...I'm upside down in my mortgage & considering short-selling or foreclosure...

1) what is my best option?

2) what are the implications if I don't have to/want to file for bankruptcy?

3) can the lender seize my assets, i.e., savings account, vehicles, etc.?

4) do lenders work out payment plans to resolve a deficiency if a short sale is approved?

5) Can I walk away without proving hardship, losing savings & assets?

Due to the vast decrease in property value in the area along with undesirable tenants/residents & crime, the property has become a liability for me & financially draining (high interest mortgage, association fees, property taxes, insurance, improvements/repairs, maintenance). At this point, suffering from bad credit for 7-10 years seems a small price to pay for peace of mind & shedding stress, which is taking its toll on my health.

Many thanks for your advice,

IL resident with an albatross around her neck

Answer

Your best bet would be to file a bankruptcy, as it is unlikely that you would find a viable purchaser.

Answer

Frankly, my thinking is that this is too complicated on the one hand, and there are other factors that you may not be sharing, that could have a bearing on how to answer this, that makes an email response in my opinion inadequate. For example, it might make sense to find a way out of your lease and move back to the devalued property and possibly talk to the lender about a loan modification even with the decrease in value. It may make sense to talk to the lender about a short sale and finding a way to deal with what is called forgiveness of debt income. Do you have a family with additional considerations? Or as Mr. Dobra says bankruptcy may be a way out but again there are potential income tax consequences. You'd be best advised to sit with an attorney and work through the options with a complete assessment of your situation.