Foreclosure or Bankruptcy?

I realize the mortgage company only cares about the money but this is a proposed hardship letter. Please read this and let me know what my options may be. We live in IL.
To Whom It May Concern:
Please accept this letter on behalf of my wife, our two children, and myself. We purchased what we thought was our "dream" home in October of 2005. We got a good deal on our home that we knew needed some work but as a handy guy, I could take care of it. Our home has many nice attributes and Lake Summerset has many amenities that we enjoy. We love being where we are. We have been blessed with wonderful friendships from our neighborhood, our church, and our son's preschool.

Our son just loves his school and the friends he has made. As a family, we thought for sure that this is where we were supposed to be, but after everything that has happened to us which I will mention, we have no choice but to relocate.

Due to the housing market and construction industry, I was laid off from work quite a bit. I have been searching for a comparable job and picked up side jobs in the interim to help pay the bills. We struggled to make payments and resorted to making them with credit cards. We were using our credit cards to survive. We will be relocating to WI and will have to live with my wife's parents.

Our dream home turned into our worst nightmare. It has been the worst 3 years of our lives and we must get out of it. The previous owner was very dishonest and did not disclose everything he knew about the house. Not believing in suing anybody, we looked for legal advice. We were steered away and the costs of services were way beyond our budget.

It started out with leaks in the basement, then in the three season room, then in the main roof. This in turn ruined the ceilings and saturated the drywall. I looked into repairing and got estimates from over 12 contractors who didn't have a similar solution because of the way the house was built. The prices ranged from about 10000 to 50000 dollars. The home was built by and lived in by the seller. There are many issues that I became aware of after further investigation.

Due to income, we applied for the ILHEAP weatherization program. The man who came out declared our home a "money pit" and said whatever he does isn't going to help much.

I have also found that Stephenson County does not have an inspector to make sure that builders are abiding by all of the building codes. This is exactly the kind of product you get when the building inspections do not occur.

We have looked into selling, however, there is no way we would be able to with the condition it is in. We have no equity either. I have done major improvements on the home and it may look nice but that is deceiving and I believe the home may be in disrepair. Due to the dishonest of the seller, lack of employment, lack of building inspections and failing housing market we are not able to pay for the mortgage of our home.

After seeking credit counseling, we started realizing what was really happening to us. We took action. We humbly resorted to state financial assistance for food and health. My wife quit school and we were forced to pull our son out of school as well. It has been very depressing, embarrassing, and emotionally frustrating being a father who can't provide for his family due to reasons out of my control.

We are writing with hope that you have some solutions for us that will not destroy our credit. We want to avoid foreclosure and/or bankruptcy and salvage our credit. My credit scores have always been good and I know that a foreclosure on my record will affect me for years to come. I am asking that you please assist me in avoiding this. We just want to wake up from this nightmare, move on, and start all over.

I deeply appreciate your help and understanding in this matter. If you have any questions or need anything further from me, please contact me personally. I have previous owner's address and the names of neighbors and previous renters who witnessed the issues. I have a list of the improvements to the property available upon your request.

You can send them the letter but expect no sympathy from them. The best course of action is for you to contact someone at the mortgage company and have a face to face conversation to show them the math on your end and your inability to continue fulfilling your financial obligation with them.

Thanks but wont happen

I understand that I probably won't get any sympathy and am not really looking for it because we know the odds. We are looking for the chance or blessing as we would call it because of what happened. We are unfortunately looking at bankruptcy and are ready for the consequences. With Chase there is nobody to talk to face 2 face. It is all done over the phone or fax. It may have something to do with how big they are. I've heard "Good Luck with Chase" from many people.

Good luck then with your bankruptcy. Hire a good attorney to make sure that it is correctly filed and discharged.

Let me know how it works out

I have empathy for you. We are in different areas but your story is so like mine. I bought a double wide mobile home on land and the home was totally misrepresented to me. The mortgage guy even used his own personal money to buy down points (without my knowledge) to get me qualified for this home that was not worth the asking price. They refused to do a home inspection, telling me that would void the "no down payment" offer. They illegally used my minor daughter as a co-borrower. I have had this mortgage for 6 years and after the 1st year my mortgage jumped over $150 due to the aforementioned buy down the mortgage guy did. I have had problems paying the mortgage ever since. My mortgage firm refuses to help me and tells me to work with my other creditors so they can make me pay balloon payments to get caught up. The house needs more repairs than I can afford. The payoff is $25,000 more than the tax value estimate. I would prefer foreclosure to this continued nightmare.

Why would you file for bankruptcy? Why not just let the loan default/foreclose. Keep all your remaining obligations in order and current, aggresively build your credit for two or three years and let this blight remain on your credit reports for the next 7 years (same amount a bankruptcy will remain). But it will be easier to make a comeback without the bankruptcy plus less costly.