- DH was laid off 18 months ago and hasn't been able to find work since then; his unemployment will run out next month.
- After unemployment runs out, DH will no longer be able to make his CC or truck payments ($1400/mo combined)
- I still have my job and it pays well, but not enough to support the budget we created when we had 2 incomes.
- We've burned through all our savings trying to stay afloat - have not missed any payments yet but it's been very close.
- We have high credit card debt ($1600/month in minimum payments). It's insane. We have learned a huge lesson on that.
- Our mortgage payment is on the high side ($2800/mo) and has gone up by $50/month in additional PMI every year.
- We bought it our house in Aug 2007 right before the market crashed, so we put $0 down and paid top $$. It's now underwater by about $60k.
We've run the numbers backwards and forwards, and the ugly truth is that we're paying a fat mortgage on a property that may never regain its former value - especially now that we can't afford to maintain it. I started looking at homes to rent in our area and they are quite reasonable. Yesterday, I noticed that the house next door to us is on the market, and they will do a sale, lease, or lease purchase. They are asking $1100/month for the rent...which would save us a killer $1700/month. It's hard not to consider this a serious solution. We'd be able to manage all of our bills on my income as long as necessary, and when DH finds work again and/or some of our bills are paid off, we could build a decent safety net so we don't get into this situation again (in our old age, we'll probably hoard stuff like the folks who lived through the depression). I might even be able to go back to sleeping at night. And hey, we wouldn't even have to move out of the neighborhood.
Of course, this wouldn't be without its drawbacks - here are some I can think of:
- Having to move again (ugh) - a PITA, but probably the least of my worries.
- Going through foreclosure - I'd love to get a deed-in-lieu if possible, but I know these are hard to come by. We'd be happy to work with the lender on a sale or a short sale if needed, but realistically FC is likely in the current market.
- I know FC would trash our credit, but at this point that is likely to happen anyway.
- Getting stuck with negative equity on the house - this is my biggest concern, and could leave us every bit as stressed out financially as we are now.
If we go through FC and end up with a deficiency judgment for $60k, might we be able to discharge that (and the $50k CC debt) with a BK later on if DH still isn't working? Or would we no longer qualify without the huge mortgage? Would we be better off waiting and doing FC as part of BK? Or are they done separately anyway, since BK stops FC?
If we don't do this, and DH doesn't find work in the next month or so, we will need to stop paying our CC bills so we can keep up with mortgage and car payments. That doesn't seem like a happy option either.
Thoughts on this? Am I forgetting or missing anything? It's all purely speculative at the moment, I haven't even gone over to see the house or talk to my neighbor about it yet, but just based on numbers it could work out well. I'd love to hear from anyone who's been through something similar.
