Q: I am in a tough financial situation. My primary residence was foreclosed on, and after that happened, I moved to my investment property. Once that mortgage adjusted, I realized I could not afford to pay that mortgage either.
My guess is that I’ll go into foreclosure on this property by April.
I am thinking about filing for bankruptcy. Will it be harder for me to get another home loan with two foreclosures on my credit history, or will it be worse if I have two foreclosures and a bankruptcy? Please help.
A: Well, I have to commend you for staying positive. Not many people would be thinking about buying another home while facing foreclosure in their primary residence. I actually think it will be pretty tough to get someone to give you a home loan after you’ve been foreclosed upon twice, whether or not you file for bankruptcy.
So let’s worry about what’s happening to you now, and not what may happen in the future.
Is there any way to save your current house? Can you rent it? Can you rent part of it and continue to live there? Can you sell it? Can you agree to hand over the deed to the lender and complete a deed-in-lieu of foreclosure? Have you discussed what is happening with the lender to see if there is any way to rework your loan?
I’m sure you thought that buying an investment property was an easy way to make some money, but as you’ve discovered, the reality of investing in real estate can be messy.
If you earn any real money at all in your day job, it’ll be tough for you to file for bankruptcy. But if you feel as though this is the only way out, then consult with a bankruptcy attorney.
In the meantime, do what you can to keep current on all of your other bills. When it comes time to rebuild your credit, that’s what you’ll need to focus on — paying each and every one of your bills on time, every month.
Once you have two to four years of clean credit, you can think about buying another piece of real estate.