Why shouldn't I walk?

NEW -> Contingent Buyer Assistance Program
After you figure in tax savings on interest cost, and tax costs of taking the short sale as "income" in the eyes of the IRS, I don't know how much you'd actually save per month.



One thing to consider is that a forclosure might interferre with getting a security clearance, if your line of work ever requires those. That and companies sometimes do credit checks as part of pre-employment verifications. I used to think that was intrusive, but not so much any more.



If one is willing to cut and run and stick the bank for a loss when you are able to make the payments, some companies question the judgement and business ethics of of the person. Would you want someone handling company finances if they have a demonstrated history of marginal business ethics?
 
<p>Regarding the taxes... unless I'm mistaken, and I may well be, but in California because I have not refinanced both my 1st and 2nd are considered non recourse loans. In that case, and this is directly fom the IRS:</p>

<p>"A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income."</p>

<p> </p>
 
I have been contemplating an answer to your original query for a couple of days. I wish I had something profound to add.





IMO, your best course of action is to stop making your payments and let them foreclose. Save the payment money. After the foreclosure, declare bankruptcy and wipe out the credit cards. In the end, you will have a foreclosure and bankruptcy on your record (you will not be alone,) and you will have some cash to start over.





This is probably the best financial move despite the lingering issues with future credit. However, beyond that, it will be a huge emotional relief. The longer you stay in that house and in that situation, you will have this ticking time bomb scenario hanging over you. This will be a source of latent stress for years, and in the end, you will probably end up in foreclosure and bankruptcy anyway. The sooner you make the decision and prepare yourself as best you can, the sooner this will all be over, and the sooner you can start your new life. It will be very emotionally liberating.
 
OK, if you don't want to get married.......I vote for walking.





Stop paying your mortgage(rent).......and use the money to pay as much of the credit card that you can. I am not sure how long it takes to get you out..........just pay off as much as you can on the CC. If you get 4 months, your cc bill will be in the $12,000 range when you finally get kicked out. Next, rent a place for $1200 and use the other $800.00 to pay off your CC. In about 16 months you will be out of dept. After the CC is paid, save the extra $800 a month for a rainy day.





As for the taxes, it seems that GW will forgive that and if he doesn't cut a deal to pay the IRS $100 per month.





In about 10 years all of this will be a distant memory, and you will have savings.......
 
<p>Nano - 2 problems with that. Once the foreclosure goes through, actually once my first payment is late, my credit card rates are going to skyrocket up to 30% in most cases won't they? </p>

<p>And two, I'll need to rent before that foreclosure hits because any decent landlord is going to run a credit check before I move in, and I won't exactly be a prime rental candidate. </p>

<p>IR - I fear your advice may be right, based on what will happen with my credit cards once the foreclosure goes through I may have to go BK anyway...</p>
 
Is a prospective tenant with a recent FC/bk7 really that bad? Consider this: They're solvent. Having no credit they're not likely to become insolvent again any time soon either. At least, that's my thought on the subject.
 
are you a US citizen? marry someone from china get 50k endowment money (wink wink) charge her for rent since you have to live together anyways. problem solved. usually the girl can't work but they come from a rich family so it is all good.
 
<p><em>>>Is a prospective tenant with a recent FC/bk7 really that bad?</em> </p>

<p>I think it's that whole "not following through on your word" thing. </p>
 
<p>I still have problems with walking away but everyone does make good points regarding the fact it is more of a business decision than a moral one. </p>

<p>If the goal is to maximize your cash, then I suggest the following:</p>

<p>1) move out and find a cheap rental


2) find a tenant to rent your condo for $1300 a month


3) stop paying the mortgage and patiently wait for bank to foreclose


4) stop paying the CC minimums and try to pull out as much as possible (ie, max out the cards)


5) file for BK at end of it all to wipe out CC - 10 years of bad credit is no different than 7</p>

<p>If the foreclosure process takes 6 months, you get to pocket $7800! And depending on how much room you have on your credit cards, you can get some new toys before they max out. Sure the person renting the condo from you gets screwed but thats a business decision as well right. They signed a rental agreement with you which covers you from any personal responsiblity of finding them shelter after they realize your place is foreclosed. So all in all, you make some money, get some new toys, and get a clean slate.</p>
 
<p><em>>>Which CC companies do this?</em></p>

<p>Reason - All or nearly all of them (Citibank may have stopped this). Welcome to the world of <a href="http://en.wikipedia.org/wiki/Universal_default">universal default</a>.</p>
 
rkp, i would have agreed with some of your previous pts about moral judgment playing a part in all of this. there's a reason for bankruptcy laws but taking advantage of loopholes and milking anybody you can on your way down is the exact sort of thing we so often rail against here. now heres an actual case study unfolding before us and we're encouraging all the bad behavior we've previously complained about.





take advantage of bankruptcy protection as it was intended. walk away from your home and rebuild yourself. but theres no need to stick it to some innocent guy who thinks he's in a perfectly legitimate rental situation and watch him suddenly get stuck with a bad housing situation. and its easy to milk a faceless, evil credit card company but in the end that just hurts everyone else. i once met a guy who got in an auto accident. it wasnt his fault so he had every right to get his car fixed, rental car, and medical treatment. he bragged about how he went to a chiropractor twice a wk for a massage and insurance paid for it. good for him -- he deserved a lil pampering after all that. then he went on about how he found some orthopedic doctor that could "prescribe" a tempurpedic mattress for his slightly achey back and get it ordered from a medical supply company. so insurance covered that too. personally i think that just goes a little too far even if it wasnt technically fraud. when you treat bankruptcy, insurance, and other things that are supposed to help you in a bad situation like you've just won the lottery, it just raises costs, premiums, fees, legal restrictions, etc. for the rest of us.
 
rkp, a complicit tenant might be able to delay the eviction a bit, too. <a target="_blank" href="http://www.caltenantlaw.com/images/UDFlowChart.jpg">The game</a>.
 
<p>Eval, </p>

<p>Thanks! I know it sounds like I have been in a cave or something for asking that question. But the only card I have is the AMEX. Hence, didn't know there was such a nutty penalty by CC companies. Yikes!</p>
 
Oh RKP . . . that's rent skimming, which is a violation of the Civil Code, and might be criminal and/or a violation of the deed of trust the lender has on the property. In addition (and consult a BK attorney to be sure), but any CC charges made within 60 days of a BK filing are usually not dischargeable. Nor are any that can be proven to be fraudulent.
 
<p>rkp - I can't tell if you're kidding or not??</p>

<p>I don't want to go wild with credit cards before filing BK, although that's not a bad idea, why not just take a month long trip to Australia if I'm going to go down in flames... my goal in posting here originally was to see what options I have as BK and foreclosure are the LEAST desirable options IMO. </p>

<p>My credit cards have been hovering right around the $20k level for a year or so, for the first 9 months or so after moving in I was making $55k and paying out far more per month then I had coming in, hence the monumental debt. I already know this whole condo foray was a huge mistake, but I can't go back in time so I'm trying to fix what I can while I still have some control.</p>

<p>I'm just frustrated that in my current situation I don't have the extra cash to pay them down, sure i can cancel the gym and cable and save an add'l $100/month, but what does that do for me? </p>
 
<p>effen - the game board is awesome! AV should print it out and slide it under the door for his new tenant </p>

<p>EvaL - not sure about rent skimming but the CC charges would be made 6 months before BK as he won't file BK until the foreclosure</p>
 
AV Paperboy,





Don't screw some renter. There is no need to.





Don't go on a vacation and blow your cash. You will need it as you get adjusted to living without credit. You will need some savings to allow for the unexpected. Credit is just a negative savings account.





Prepare for this and take it seriously. This is your chance to get off the revolving debt merry-go-round.
 
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