02 Jun Bankruptcy Solution: Owning Two Houses Isn’t Always Fun
Many people are facing bankruptcy today because they bought a new house before they sold their old house, only to find that they then can’t sell the first home. Real estate has always been thought of as a safe investment, and one you could sell if you needed to get away from it. That isn’t true any more.
A lot of double homeowners seeking bankruptcy had bought a new home that they could afford on their salary, thinking that they would move and then sell their old house. These are homes that would have easily sold in previous years but not in today’s market. The house might be worth less than what is owed on it. The owner may attempt short sale, but have no luck. In some cases, bankruptcy may be a better option than short sale.
When the house doesn’t sell, some homeowners find themselves unintended landlords thinking that might solve the problem, but sometimes it creates new problems. Renting may not help since in many areas the rents don’t cover the actual mortgages on the homes and the owner has to make up the short fall. Renters often don’t keep up the property and owners may face repair bills they weren’t expecting, not to mention the fact that they must repair rented property to fulfill lease terms. Renters might fall on hard times themselves, and stop paying rent. Owners then face the unpleasant experience of having to evict the tenant, or hire an attorney to do it for them.
When the first home doesn’t sell as expected, the home owner might have resorted to using credit cards to make mortgage payments, fix up the house to make it more attractive on the resale market, and pay other expenses carrying two houses. Many find themselves facing foreclosure and filing Chapter 13 bankruptcy to stop the foreclosure, or a Chapter 7 to try to rid themselves of the debts.
Chapter 7 can write off unsecured debts like medical and credit cards, and help by releasing the homeowner from the mortgage on homes they don’t want to keep or freeing up funds that had been used for unsecured debt payment to use to keep the house. Chapter 13 can also give a homeowner relief from unsecured debts, and give them time to catch up any missed payments or sell property.
Buyers may be tempted to buy a new house in this deflated market, but before you do think twice if you haven’t already sold your current home. Owning two houses isn’t always fun.
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