The Case for Walking Away

I wish it were this easy. I had a great job but hit some health concerns. When I got out of the hospital I took a job with my sisters company which was much less stressful. She is in the interior design business and we borrowed from my 401K and another $50,000 on my credit cards to keep the company afloat. Sales went way up with my computer skills marketing the services and hit over half a million until the big housing crash. Since then I have been fortunate enough to go back to my old profession making good money. Problem is that is isn't enough and never will be. I can't make the minimums card payments on my own and it is getting harder for my sister's company to help. A lawyer ran the figures and told me that Chapter 13 won't leave me enough to even live on. I???ll have to give up my home, car, pets, and everything else not nailed down. I don???t live extravagantly and do not have many fancy clothes and drive a 2002 Maxima I just paid off. He suggested Chapter 7 but in order to do so I have to make $50,000 less a year than I do now. So the answer is give up my career that I spent over 8 years in college to obtain a Masters in my field so that I can default on my loan and add to the banking credit crunch problems or wait until the banks catch up to me, keep working insane hours and lose everything anyways. I don't see how either bankruptcy option helps me even though I have never filed bankruptcy before. To rub salt in my wounds the banks have double the minimum payments and raised the interest on almost every account up to the default rate of 29%. Suggestions for that situation? Fake my death and start over in my career under an assumed name?

I wish it were this easy. I had a great job but hit some health concerns. When I got out of the hospital I took a job with my sisters company which was much less stressful. She is in the interior design business and we borrowed from my 401K and another $50,000 on my credit cards to keep the company afloat. Sales went way up with my computer skills marketing the services and hit over half a million until the big housing crash. Since then I have been fortunate enough to go back to my old profession making good money. Problem is that is isn't enough and never will be. I can't make the minimums card payments on my own and it is getting harder for my sister's company to help. A lawyer ran the figures and told me that Chapter 13 won't leave me enough to even live on. I???ll have to give up my home, car, pets, and everything else not nailed down. I don???t live extravagantly and do not have many fancy clothes and drive a 2002 Maxima I just paid off. He suggested Chapter 7 but in order to do so I have to make $50,000 less a year than I do now. So the answer is give up my career that I spent over 8 years in college to obtain a Masters in my field so that I can default on my loan and add to the banking credit crunch problems or wait until the banks catch up to me, keep working insane hours and lose everything anyways. I don't see how either bankruptcy option helps me even though I have never filed bankruptcy before. To rub salt in my wounds the banks have double the minimum payments and raised the interest on almost every account up to the default rate of 29%. Suggestions for that situation? Fake my death and start over in my career under an assumed name?

Man was I stupid ! I paid my mortgage off, paid my cars off, funded my retirement and I could have saved so much money by letting the govenment bail me out or file bankruptcy. Soon there are going to be no responsible bill paying people in this country. This has got to stop. Live on what you earn and stop living for the moment. Idiots !

MrStiles:
You sure make the point of your ignorance, as well as the lame excuse of today's youth' It's never 'our' fault. It is their fault, always has been. When did it become acceptable to not be responsible? You sound as if nothing 'you' do is your fault. Believe me, your actins, as well as all those that cry' not my fault' are at fault. The sooner those of you that refuse to take the blame for your actions are swept out the door, the better our great nation will be again.
As far as my house, well, we still have over 60% equity. Must have educated ourselves somewhat properly. Then again, we, as compared to you, are willing to accept our actions as our own, not try to blame scapegoats or live off of someone else. And then you quote Greenspan, Man are you touched in the head. Furthermore, It is always the persons fault that neglects to read and understand ANY document, contract or otherwise, before they sign.

The way I see it now, is the bailout should be to every home owner by paying off there mortgage by 30%, and giving all a 4% rate on the existing mortgage loan (after the 30% reduction}. People will have more $ to spend on material items as well as essentials. Atleast this way everybody benefits. Then the government can just pay the banks the decreased 30% difference. This maybe the only way..... JP

Ridiculous, it is not the banks fault you made a bad financial move. Why should they take your loses? If your house goes up in value, are you not also saying they should increase the amount you owe? You are saying that if your house goes down in value they should reduce the amount you owe? That makes no sense... Every single car loan is negative the minute you sign and that seems to have been going just fine. None of this sounds American. Maybe we have let too many foreigners in to this once great nation.

ggllww, yep, I think also this is the beginning of something very Big and bad coming. I am sorry that you are going through this, But I went through mine 5 years ago. The job, creditors and then my house. But given the fact I am a survivor. I got back on my feet and kept fighting.
We in 2009, are going through some very different and hard times and it's not going to get better for a while Can the USA
hold on for another 18 months? We will be lucky to hold on for 6 months at the rate we are going. Better start reading on the Great depression as that is where it looks we are headed. With the amount of people being laid off and the stores going under, not to mention some banks. By the way who determines who get the bailouts?
Chin up dubbie.... know that you are not alone.
God speed and bless you all
I agree that our credit sisuation is gonna get real bad.

mrkwildcat May all of you who have destroyed the value of my home, as well as the values of my neighbors all burn in ****. My wife and I were smart enough, responsible enough and tactiful enough to get a 30 year 'fixed' mortgage with a rate of 6%. not only have we owned our home for the past 10 years, we have never missed a payment. Why? Becuase we did not approach home ownership with greed in mind. Believe it or not, we eductated ourselves before purchasing a home.
Well I guess since you educated yourself then you have only yourself to blame. Your house was never worth what you paid for it if its no longer worth what you paid for it those many years ago. Its not the fault of every homeowner who didn't read every iota of fine print nor the fault of people trying to make money by investing in real estate. This crash has been brewing for years (read Greenspans latest mea culpa). Corporate greed and lax Federal oversight made your soup for you and Bankruptcy is there to wipe that slate clean for individuals. Personally I say go for it (Chapter 7) and charge the lawyers fee to you AMEX.

Mrkwildcat, Tell me, please, why does it have to be the "greedy, uneducated, welfare receipiants being allowed to falsely own a home they could never afford"? Could it also be not just the "house flippers" but also the "smart, responsible, tactful" persons like yourself who contributed to the demise of the market right now? To try to blame the bigger problems on those who may not be in your financial position, or who may not have "educated themselves" according to your standards is a gross misjudgement. I am not a welfare recipiant, or a house flipper but I do know that it was not them alone that caused the collapse of the housing market or your home values to decline. Cut a human being a break, will ya? Why don't you judge the real criminals-those that were in charge of the market industry, and the banking industry, and those in the government who knew this was happening but stood idly by and let time elapse so not only your housing value has declined but thousands like you, from the blue-collar to the white-collar to the rich, everyone is suffering. Stand on your soapbox and write the government, and try to create a change where you can. Or do you just like to stand around talking just for the sake of hearing your own voice??? Be creative, help someone in need, if you know something share the information. Stop perpetuating the problem and be a part of the new solution. This is 2009, not 1959! Get a life!!!!

Dear mrkwildct --
Well-intended people like me have been caught in the real estate market collapse. I am sincerely happy that your life has run comparatively smoothly. I moved for health reasons 4 years ago. At the time, our realtor assured us that our fabulous lakefront home would sell very quickly. When we moved, we had $110K in the bank, $150K equity in our 11-year old home, modest debt, and no mortgage on our new house. We lived in a very depressed area, and its economy nosedived horrendously soon after we left. The net result: our old house is finally selling after 4 years for $120K less than appraisal (and the bank is getting every penny), our savings are wiped out, our debts have ballooned, and we got to court this Wednesday under Chapter 7. I'm happy all has worked iout well for you, but you need to be less judgmental.

In life, we are sometimes too quick to jump to conclusions. Having worked in the legal field for many years I have seen both sides of the coin here. If you are smart enough to get a great loan, and have been taught and brought up to be financially sound that is great. I have seen people in my office that came in just so I could read the documents to them that they got in the mail. There are some predatory lenders and brokers out there that take full advantage of the situations. Sometimes people don't know that they are ignorant to the legalities. They simply believe the word that the person gives them. I would never have believed such a thing possible until I saw it. I have seen banks give loans in excess of $200,000.00 to an individual whose income was a federal minimum wage job. It is not pretty, but there is a lot more to these economic problems than any person can see.

Stick it to the blood suckers!

LMAO

If you can't pay for it during the entire life of the debt, why are you even seeking the debt in the first place? So many people are crying about their 'ARM' loans inflating to a price that they can not pay...why were you so foolish as to not read the fine print. Most, if not all knew they could never afford the loans they were seeking. Yet, greed and the since that they could just 'flip' the house and make something for nothing resulted in their demise. Well, I say it is well deserved. May all of you who have destroyed the value of my home, as well as the values of my neighbors all burn in ****. My wife and I were smart enough, responsible enough and tactiful enough to get a 30 year 'fixed' mortgage with a rate of 6%. not only have we owned our home for the past 10 years, we have never missed a payment. Why? Becuase we did not approach home ownership with greed in mind. Believe it or not, we eductated ourselves before purchasing a home. Yet, due to the greedy, uneducated, welfare receipiants being allowed to falsely own a home they could never afford, coupled with the greedy 'house flippers' the soup has been made. Well, I say go down in flames!!! You chose to live beyond your means, now pay the piper! And those of you who purchased a home that was overinflated by 200%, idiots!!!!

I filed bankrupty in 2004, now that I have finally completed the terms (October 2008) thought I would be getting all my fiinance together. I get laid off (November 2008) . $$$%%%. Now what should I do, the mortgage is due, I am receiveing umeployment , the circle never stops. I take 1 step to correct finance and 3 step backs. Welcom to America .

Pubpounder, I totally agree... I think all the people should go to the White house and demand a bailout as did these banks, auto makers, wall street. It is we the tax payer who are footing this bill. Where in the very people we voted for. including
Biden who voted for the banks to be able to do what they are doing to us today. The banks pulled together 4 years ago for this bankrupty law and paid 163 million dollalrs to get this passed. I do believe someone saw this finiancial crisis coming.
I think as Obama takes office he should cut these banks at the ankles and do away with this kind of practic. As part of any kind of bail out they might be given. Let the american consumer get back on there feet. The consumer never said they would not repay thier debt.... But this is rediculous! double cycleing,late fees. Also when these debts are charged off because the banks don't want to deal with them. It might leave a mark, but I don't feel anyone after that should be allowed to collect on a charge off. The banks already marked you...isn't this like double jeopardy. Being charged twice for the same thing?
watcherone

I've already drained my 401k trying to stay in a house that is worth $90,000 less than I owe on it. The credit card companies have raised my interest rate to nearly 30% because we've been late on some payments while trying to save the house. We finally decided to file bankruptcy, and let our house go into foreclosure. My only regret is that we didn't do this sooner.