Expert: Mark J. Markus- California Bankruptcy Attorney - 8/31/2008

Question
I live in LV, NV.  I am going to file for Chap 7 bankruptcy next week because I can't handle my bills anymore due to bad decisions I made (single mom) to help take care of my young 20's daughter who has cancer.  I lived off credit cards when she was in the hospital in San Francisco for a leg amputation and more.  Plus, I purchased a house in 2005 (rather than renting) so that we didn't have to worry about moving or the rent going up in a year.  I have no idea why they gave a loan when I look at how much I was making!  Regardless, I have kept up on the house payments all along.  However, the amount I owe on the house ($189,000) is now $50,000 more than it is worth.  If I get rid of the credit card debt and surrender my vehicle, I can make the payments. But the ARM will reset in 2 years and I won't be able to afford it then.  Is is best to add the house to the bankruptcy right now and is it likely to be approved?  Also, what does that do to the HOA dues that I have kept up on as well?  Thankyou for your consideration.

Answer
I'm sorry to hear about your situation.  Sounds like bankruptcy is a viable option for you.  As far as your question, I'm not sure I understand it.  You must include all assets and all debts in any bankruptcy case, so the house will be included.  Whether you retain it or surrender it after you file the bankruptcy is completely up to you.   As long as you don't enter into a reaffirmation agreement on the debt, you will be discharged from your obligation.  On the other hand, you may be able to negotiate a new loan to take you out of the ARM as part of a reaffirmation agreement.  Be sure to explore these options with your attorney.