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How Can We Get Out of Our House Since it Won’t Sell for What We Paid? – Kim

“Dear Steve,

Due to health issues for both my husband and myself AND financial strain, we need to sell our house. We spoke to realtors that tell us we cannot sell our house for what we paid for it. They tell us we would be LUCKY to sell a 2 story 1780sf house with 3bedrooms, finished basement, 2 full baths, 1 half bath, 1 3/4 bath, ceiling fans in every room for $200,000. We paid $215,000 …..but we owe $195,000 (6% rate)on first Mortgage and $25,000 on second Mort (13.5%). What do we do???

Due to losses on 401K my husband has $24,000 in that. We will be getting $2500 back on our taxes.

How can we get OUT OF THIS?????? My husband had one heart attack last year and just can’t take this stress, I have to figure this out on my own.

CAN we sell it for less than what we owe??? WHat would happen? How does it affect your taxes if you LOSE money on your home? DO we let it go???? and let the banks have it??? I’m at my wits end over this and don’t know who to talk to or where to go for help.


Dear Kim,

A lot of people have been in the same situation as you. What some people have opted to do is hand their house back to the bank and then go bankrupt if the bank comes after them for a big bill afterwards.

If you adopt that approach then all you need to do is click here to find a local bankruptcy attorney you like, make an appointment with them and go talk to them and create a game plan. Armed with that game plan you can execute your plan and the stress and pressure will be significantly reduced. Things are so stressful right now because you feel like all of this is happening to you. Once you take charge and start steering the ship you will feel better.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • so your best answer…… to suggest bankruptcy after spending our whole lives getting an AMAZING credit score??? OMG……can’t say as this gives me much faith in your knowledge….thanks for nothing

    • Kim,

      First off, I wish someone had a magic wand to wave and make this instantly better. There simply isn’t one and anyone that promises you there is will just be sucking you in to a scam.

      Living your whole lives with an amazing credit score and quickly dealing with this problem in a painless way is like comparing oranges to penguin feet.

      An entire life of an amazing credit score is history. It all happened before. What else is history at this point is you husband’s heart attack, the building stress and the fact that your house was once worth more.

      And amazing credit can be rebuilt after bankruptcy. Your credit score isn’t what defines you and I can’t imagine how putting a credit score above the life of your husband helps you in this situation. What if he drops dead from stress over this, as you allude to, with a great credit score, that’s not really a better solution is it?

      Magical thinking isn’t going to make this situation change, definitive action will.

      If your problem is as you say, the stress is too much and you are worried it will kill your husband, and you need to sell your house but can’t for what you owe, then your choices are limited.

      So a short sale might be possible but that may take 6 to 12 months for multiple lenders to consider and possible not even approve. Even then, if the second mortgage would release their lien and allow you to sell the house for less they will still come after you for the amount of the mortgage.

      You asked me if you should let it go back to the bank and I said that was a reasonable plan to get out of this quickly. But when you hand the house back to the bank they are going to come after you for the difference between the current mortgage balances and what they dispose of the house for. If you can’t pay that big bill then you will need to incorporate it in a bankruptcy to terminate it.

      I realize you are stressed and in a panic but my advice to you was and is sound based on your situation and the goals you say need to be achieved.

      You can either follow my advice and start resolving this situation today by meeting with a bankruptcy attorney to come up with a game plan or you can continue to flail about in a panic going nowhere. Taking action trumps panic.

      Big hug.


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