secured loan we can no longer keep--need advice on course of action

[rancid0076 0]

We have a secured loan (undeveloped property) that we can longer keep. We've had this loan for almost 8 years.  

My wife is going to start college and we just can't do both.  I was just wondering what the best way that we should go about this.  We've contacted the property company and have been honest with them about the situation and they are willing to work with us however our priorities have changed and we've decided no matter what we're not keeping it.  

If it does go to court I am going to go and be honest about it and hope for the best I was just trying to get some advice on what my best route is to go.  

I'm not sure if they would even come after us or just call it a loss and resell it for way more than we owe it on it anyway.  

Thanks in advance for any help that you can offer.  

[Clydesmom 1,121]

Why don't you sell the property THEN send your wife to college?  It does not make any sense to take a loss and a HUGE hit to your credit just so she can go to school.

[rancid0076 0]

It’s been up for sale for almost two years and no interest. We’ve tried everything to get rid of it the right way. Just trying to figure out how to best way To go about it. We can’t afford schooling and property. It is what it is. 

[Harry Seaward 1,228]

1 hour ago, rancid0076 said:

If it does go to court I am going to go and be honest about it and hope for the best

As I'm sure you understand, when you stop paying the bank will report the default to the credit reporting agencies, then eventually default the loan and sell the property at auction. They will then demand you pay the difference between what they get for the property and the balance of the loan. If you aren't able to pay it they can sue you for the balance owed. 

Since  "school" is not a valid reason to default on a loan you can only expect the court to find you responsible for the debt and order you to repay it unless you have some valid legal reason. Once the court enters a judgment the bank will again make demand for payment. If you refuse, the bank then has to take legal action to collect the judgment.  Usually they can garnish your wages, levy your bank accounts, put liens on your real and personal property and, although rare, they could show up at your house with the sheriff to start taking your possessions to satisfy the judgment.

If it were me, I would be very sure going to school right now is really that important.

Have you discussed the possibly of a short-sale with the bank? 

[Clydesmom 1,121]

1 hour ago, rancid0076 said:

We can’t afford schooling and property. 

If this is graduate school you cannot afford to default on this loan.  If you are taking out GradPlus loans to cover her schooling then a default on the mortgage will disqualify you from the loans.  Due to the large number of student loan defaults credit problems are now a barrier to getting loans for schooling.  If defaulting on the loan is the only way to avoid school then you cannot afford school either.

What education is this?  There may be other options you are not aware of.