Grim choice: Walking away from a mortgage

[StartingOver08]

Doghouse is right. Our financial lives are our "business".

If BIG BUSINESS goes out and files BK, no one takes a second look. It is a function of business, when failing, to do what it needs to do to either recover (CH 11) or fold (CH 7). The market leads the business to either success or failure.

We, as individuals, have the exact same choice. Many of us have had outside factors impact our ability to survive (illness, job loss etc). I, for one, did not plan well enough to survive both cancer and the market turndown. Also, I did not recognize the "downward spiral" early enough to do something timely (thought I could work my way through the difficulties). These are not excuses, these are facts, so now I have to live with the consequences of a BK on my credit - which will affect my credit for the next 10 years in the form of higher interest, at a minimum.

So Shabam, you want the punishment to be more severe? More than 10 years? What is the point of that?

You do not create a healthy situation in the populas if you dish out punishment forever. Like wearing the scarlet BK! BK is meant to give us the ability to see the light at the end of the tunnel so we can begin our lives again. Business BK's do not have the stigma that personal BK's carry as it is - to exacerbate the stigma is not going to reduce personal BK's. It just makes effective recovery close to impossible.

What would be more effective, is a good financial education for everyone beginning in even the early years. A practical education. Our country has been on this deficit growth pattern for quite sometime and it has become endemic throughout our culture now to grow thru credit. Its not healthy and its not working. The government is the biggest abuser of this concept and you want the government to fix it? Maybe now is the time for us to learn to grow through positive models, savings models and other growth models - rather than debt models. I for one am going to make that change. Shabam, don't make it more difficult than it is by taking away our ability to recover after BK.

[BROKENN]

Shabam,
I say don't confuse financial irresponsibility with truely unforseen or hardship cases. Why not talk about the ridiculous cost of health care, for example, that has forced many into bankruptcies because of high medical expenses? There are many people that managed their CC's responsibly and bought homes within their affordability but still got whacked with medical bills that forced them to lose the house and default on debt.

Or job losses. Many here that had stable, reliable jobs when they bought their homes are now caught in the economic mess with layoffs, reduced pay etc.

Anyway, we are all aware of what we signed, the fine print, blah, blah, blah

I agree with Doghouse and Startingover. Yep, I am pretty tired of seeing this here. I really like this forum because the people and the intelligence. It is one of the few forums not laden with righteous fixed ideas. It is designed to help not to judge.

I had no unsecured debt. I didn't even own a credit card. I took a risk in business and was totally screwed by people. Lost in court though it was a court that made the laws........

And my family lost everything. We even had to move away. And who helped us? Our entire circle of family and friends; believe it or not.. an atty and this FORUM!!!!

Be nice. Teach and help. People do learn and we live together......

[shabam]

It is a completely different story when a business files to when an individual files. For anyone to make it out as if it's the same is just ludicrous. When has a business affected the entire country? I am not saying everyone is out there fraudulently abusing the bk laws but when you read about the thousands upon thousands of buy and bails, yes this is a problem. Maybe everyone else who played by the book should be proud that people made such "business decisions", which could force the country into a depression. Oh wait, I forget we don't give a crap what others think anymore right?

Let me make this clear, what I am saying is that people should not be allowed to simply walk away and have others deal with it. Such offenders should be forced into bankruptcy. This includes company directors to front-line employees who pulled such scams off. Anyone going through bankruptcy yet defending those who pulled such schemes off needs a head check.

Do you guys realize that it could possible that because of the actions of people like that, you are now bankrupt? That because of people like that you have not been able to sell your homes, therefore, forced into bankruptcy. The majority of people on this forum did the right thing and filed for bankruptcy. I am talking about all of those others who simply worked their way around the system, at everyone else's expense.

I don't buy this unforeseeable excuse. If you didn't have health insurance, you should have got it. If your company had a crappy policy, change jobs. If you bought a house that was too expensive just to show off or simply were irresponsible, well your fault once again. Spent too much on the credit cards yet were fired or injured, guess whose fault it is again. Started a business and put everything into it which failed, is that my fault.

Yes I know there are the extreme cases that some of you have mentioned about being coned etc but they are extremes and should not be considered the norm.

If you don't learn from history you are doomed to repeat it. And that is fact! I don't know about you guys but I am trying to learn from others who are not in this mess, bankruptcy, rather than find a scapegoat to make myself feel better. You guys can disagree, hate or even ignore me but it is what it is. Spend an hour a week watching any financial show like Suze Orman and then come back and tell me that your situation was not preventable. The majority of bankruptcies would be avoidable if people had been reading one of many financial books out there or paying attention to someone like Suze Orman. Suze Orman has been warning people for years now about the exact same things that have gotten a lot of people here into this mess. First sign of this, someone using their 401K to get out of debt. That gives me a clear indication that this person has not spent a an hour a year learning about finances. Not that there is anything wrong with that but don't sit here an act that it is someone else to blame.

I have friends who were checkout staff yet now own three homes and are doing better than someone with two college degrees. Not only are they financially responsible but they also proved the story of the Tortoise vs. Hare race to be true. In this market this particular friend is now looking at buying another four houses. By the way, they still work at a supermarket. Then again who is to blame considering our role models are athletes, singers or actors who make millions and a quick $$$ for basically doing nothing.

You reap what you sow. The chickens have certainly come home to roost for us Americans and our way of life.

[Genenco]

It is a completely different story when a business files to when an individual files. For anyone to make it out as if it's the same is just ludicrous. When has a business affected the entire country? I am not saying everyone is out there fraudulently abusing the bk laws but when you read about the thousands upon thousands of buy and bails, yes this is a problem. Maybe everyone else who played by the book should be proud that people made such "business decisions", which could force the country into a depression. Oh wait, I forget we don't give a crap what others think anymore right? .

Well, I don't know about you, but I do care, though it's like being one of those senators who stood up to the oil companies..Not much 4 can do hey?

Let me make this clear, what I am saying is that people should not be allowed to simply walk away and have others deal with it. Such offenders should be forced into bankruptcy. This includes company directors to front-line employees who pulled such scams off. Anyone going through bankruptcy yet defending those who pulled such schemes off needs a head check. .

I agree and I am pretty sure most here do also...

Do you guys realize that it could possible that because of the actions of people like that, you are now bankrupt? That because of people like that you have not been able to sell your homes, therefore, forced into bankruptcy. The majority of people on this forum did the right thing and filed for bankruptcy. I am talking about all of those others who simply worked their way around the system, at everyone else's expense. .

Yes, there's those who did so, and whose to blame for making those "Loopholes?" Polititions we voted in..Ummm..Errrr...

I don't buy this unforeseeable excuse. If you didn't have health insurance, you should have got it. If your company had a crappy policy, change jobs. If you bought a house that was too expensive just to show off or simply were irresponsible, well your fault once again. Spent too much on the credit cards yet were fired or injured, guess whose fault it is again. Started a business and put everything into it which failed, is that my fault. .

And how can you forsee being injured?? Sure, there's disability coverage..at 60% of normal paycheck, which lasts till SSI kicks in, then you usually drop even further down..Being a "At Will" employee..Means simply if the company decides you're out, then you're out...You can be the best employee around, yet still be "Fired" another sneaky trick employers are using for their benefit.

Yes I know there are the extreme cases that some of you have mentioned about being coned etc but they are extremes and should not be considered the norm. .

So then they aren't to be considered at all??

If you don't learn from history you are doomed to repeat it. And that is fact! I don't know about you guys but I am trying to learn from others who are not in this mess, bankruptcy, rather than find a scapegoat to make myself feel better. You guys can disagree, hate or even ignore me but it is what it is. Spend an hour a week watching any financial show like Suze Orman and then come back and tell me that your situation was not preventable. The majority of bankruptcies would be avoidable if people had been reading one of many financial books out there or paying attention to someone like Suze Orman. Suze Orman has been warning people for years now about the exact same things that have gotten a lot of people here into this mess. First sign of this, someone using their 401K to get out of debt. That gives me a clear indication that this person has not spent a an hour a year learning about finances. Not that there is anything wrong with that but don't sit here an act that it is someone else to blame.
.

Never did, got a bit too complacent about life...Never again..But hey, that's part of learning the way things work now..In short, trust no one..Nobody..never...

I have friends who were checkout staff yet now own three homes and are doing better than someone with two college degrees. Not only are they financially responsible but they also proved the story of the Tortoise vs. Hare race to be true. In this market this particular friend is now looking at buying another four houses. By the way, they still work at a supermarket. Then again who is to blame considering our role models are athletes, singers or actors who make millions and a quick $$$ for basically doing nothing..

Doesn't that just make you wonder? I used to like Pete Rose (Though he got busted for gambling on sports teams) but after him, there's been NOBODY worthy of idol worship...Nope, not one..Really a shame..Some of the greats, have faded and the "Gimmie, gimmie, gimmie" crowd has taken over...Makes me wonder how bad it is, to live further north then I do now...

You reap what you sow. The chickens have certainly come home to roost for us Americans and our way of life.

Well, that in a nutshell could be the end note..Maybe it is, maybe we HAVE to suffer to learn..Yes, reminds me of the talks from my mother about the depression..1929 till 1940..soooo..we can look at recovery in 11 years?? Ouch....

[Genenco]

Finally Shabam, I am wondering why come here and preach to the choir?

I'm fairly sure that everyone here realizes their mistakes and won't (Future wise) take credit for granted and make sure they are truly needing what they buy for the rest of their lives.

So, shrieking like a banshee at us is pretty much a kind of effort in spinning your wheels.

Progress was acheived when they filed BK. The rest of the lesson they'll learn as they continue through their lives.

[shabam]

The reason I discussed this issue is because it has indirectly affected me and clearly many other innocent bystanders. Heck I am not even a home owner but have been affected by this whole mess both caused and started by others. I am not the one who brought the house of cards down. So yes I refuse to cheer on those who simply and literally walk away, facing little to no repercussions for their actions, at all, while many here are forced to file for bankruptcy as a consequence of their actions.

[StartingOver08]

The reason I discussed this issue is because it has indirectly affected me and clearly many other innocent bystanders. Heck I am not even a home owner but have been affected by this whole mess both caused and started by others. I am not the one who brought the house of cards down. So yes I refuse to cheer on those who simply and literally walk away, facing little to no repercussions for their actions, at all, while many here are forced to file for bankruptcy as a consequence of their actions.

Now I understand where shabam is coming from!

Make no mistake, those people that are walking away from their homes are also paying a price. Walking away does not end the matter for those that choose to do so. If they are in a state that allows deficiency judgments, then the deficiency judgment follows them wherever they go. In many jurisdictions those judgments follow for 10 years and then can be renewed for another 10 years! Is 20 years punishment enough for you? There are peolple that have commited serious crimes and don't get 20 years! (Look at any number of high profile cases - Enron for example)

The Buy and Bail that you have read about is not a huge percentage of those homes going back. However, it is an aspect the media has focused upon because that is what they do to sell news! Its more interesting, to the media, to write about a Buy and Bail then to write about those of us that have owned homes for more than 25 years and are having to surrender our home due to a hardship.

You do not see the other side, where the lender actually is stimulating the foreclosures now for FINANCIAL GAIN. It is not at all like the media portrays. The mortgage industry saw this collapse coming years ago and put measures aside to protect themselves and to make a profit in this mess. For example, lender paid mortgage insurance issued on most loans - regardless of the LTV to credit enhance the bundled CDO's sold to the various investment funds. This mortgage insurance does not include the payback for the assets, or the payback on the judgments and/or notes (in a short sale) that accompany these assets. It is advantageous of the lender to blame this mess on the individual borrower than to admit their role in the lending/credit crisis. The whole story is not out yet - and may not come out for many years. (Think Enron bookkeeping on a massive scale).

You chose to not buy a home and not get involved in the mortgage meltdown, good for you. Yet you too are here, so there must have been some sort of misjudgment on your side as well. The point is, those individuals that are walking away from their homes did not cause this mortgage mess and credit crunch. This mess was started long before the general population was aware of it - we just did not do something about it before the collapse. So all of us, as individuals, are now paying the price.

[DisneyGirl]

So what is the solution? I have read several threads where it's discussed how this mess came about and who should be blamed. But much like anything in life, blaming won't get you anywhere. Action will.

So, how can this be fixed? I heard about the mortgage bailout (I'm sorry I don't remember exactly what they called it) that didn't go anywhere. Is there any news on a new plan? I am watching neighbor after neighbor lose their home. This is a brand new development! So it only took one year for this many to lose their homes. Not surprising since the loans the sales people were shoving around were a mess! Nothing I'd ever take out but I'm a pretty mortgage savvy person. But how do we help those who didn't understand or those that suffered severe hard times? I wish we could see some action rather than continue to toss around more blame. Maybe we do that because their is no solution?

Sorry for my rambling here. We were looking at Christmas lights last night and this whole thing really got to me. There were just so many "For Sale" signs everywhere we went.

[creditcruncher]

This is a sticky discussion. I am not favoring anyone but given the cases, walking out should be a very good choice. If you can't handle anymore of the mortgages then why force oneself to starve to hunger just so you could pay your mortgage.

On the other hand, I agree with Shabam. Although you can't predict how future will turn out at least you should have been cautious for the things that may turned up, like having marginal savings for mortgage payment.

Life is simple my friends, as they say.

If you have mortgaged it, pay it. If you can no longer, just walk away. Haha! Cheers!