Why shouldn't I walk?

NEW -> Contingent Buyer Assistance Program
<p>A little more thought on the rent skimming. If it is against the law, then AV just needs to make sure that the bank doesn't know he has a tenant so he should find a tenant looking for a 3-6 month rental and offer a discount of $300 so its a win-win. That takes away the guilty feeling of screwing the renter too. </p>
 
Citibank did stop (or is going to) raising rates based on the universal default, here is a link to an article that discusses this, apparently, it is believed that other lenders will do the same. I heard this on the morning news on KTLA about some congressmen giving the credit card companies grief about the universal default.
 
<i>"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:



"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.""</i><p>




av - The above is correct, but don't read into it what you want to be true or what you think is true. If any debt is forgiven, recourse or non-recourse, capital gains tax will be incurred on the forgiven amount, (debt income), per present tax code.
 
"PRESENT" tax code...as bush said today, there is large amount of support in the congress to change this. Bush talked about that issue specifically in this speech, and asking congress to present him a bill.
 
<p>Awgee - Thanks.</p>

<p>On a side note, clearly this would be a huge benefit to me, but if congress does pass such a bill and Bush signs it, both of which I'd fully expect coming into an election year, aside from the credit impact, which admittedly would be huge, there is zero liability for the thousands of others in my position. Wow. </p>

<p>IR - I was joking about the trip, I have no desire to screw a renter in addition to myself. Ideally I'd pay of my credit cards before walking/selling for a loss and not have to go BK. </p>

<p> </p>

<p> </p>
 
Irvine123 - the mortgage debt relief bill has already been approved by congress, it is waiting for the senate to approve it, the Bush would sign it.
 
<p>Talking about credit card companies. Most if all are sneaks!!</p>

<p>Universial default is just crazy. If they want to increase my interest rate when my score goes down, how about lower the rate when my score goes up? Well, they will never do that. </p>

<p>I have a citi Plat. mastercard with $40000 credit line. I never use it, only for emergency purposes. I get letters from them twice a month offering me 0% interest for one year! The last one was last night. Yes, 0% interest! What they don't tell you in regular size fonts are that the transaction fee is 3% with no max cap. (it had a 75 max cap before) So, if i take their bait, and put $40K in my bank, I would have been charged a transaction fee of 3% x 40000 = 1200! </p>

<p>Credit card companies know exactly what they are doing. They hide behind the curtain of "consumer should read the fine prints, and be responsbile for their own action". </p>

<p>AVPaperboy, like I said earlier, I will consider walk only if i can put the $20K credit debt in the BK pot too. Consult a good lawyer. If you can declare BK without getting liens putting on your salary, then 30% credit card interst rate doens't really matter. Since you would stop making payments on both the house and the CC the same time. You need to have a plan after talking to a lawyer. </p>

<p>Walking away without getting your credit debt wiped out all together is a silly business decision. The difference is three years of bad credit, and you saved yourself between $20K to $25K (with interest). Don't get your emotion get into this AGAIN!. </p>

<p>I only use AMEX, this way you pay everything off. For those places that don't accept amex, I either paycash, or use my check card. </p>

<p> </p>
 
AV Paperboy,





Regarding this condo that you purchased, how do you feel about living there?





If you're very happy with living at the condo and it makes you feel good, then let's find ways to keep it. But if you don't care, or if the place makes you depressed, then follow Irvine Renter's suggestion and let the bank foreclose on the property.





Ultimately, what's important is what makes you happy, and not the bottom line of some spreadsheet. If things don't work out for you financially here, you always have the option to go abroad and start over. Even if you have no job skills, you can still teach English (hint: Middle East will pay a lot more than East Asia) abroad.





I'm not advocating being financially irresponsible, just look for the sensible thing to do for yourself. Some people force themselves into a corner and can't raise their heads to look at the bigger picture.





If you do decide to stay, the primary concern that I have is the 290k mortgage and the rate reset in few years. If you qualify for Bush's bail out, that'd extend your grace period by few more years. The 20k credit card bill can be negotiated via debt settlement, but at cost to your credit score.





Like others that have suggested, you can get a room mate to share your condo. Note that you don't have to share your bedroom, you can put the room mate in the living room and charge him/her less $. It works for some college kids looking to save on rent. Plus room mates in college can introduce you to many friends from school, including pretty college girls.





Alternatively, if you think you're made with the right stuff, throw yourself into business and try to make a boatload of money. Some people are good at saving money, and others at making money. If you think you've done a poor job at trying to save $, perhaps you're the other type who might be more successful if you abandon all fears and charge forward. The worse thing that can happen is failure, and I don't think that's any different than declaring personal bankruptcy.

 
<p>All - </p>

<p>Thank you for your responses, all of your comments have allowed me to really expand my thinking and take a little time to evaluate my options. I'll keep you updated.</p>

<p>One last question - Hypothetically let's pretend I list and get a reasonable asking price where I'm looking at a shortfall of $20k or so, am I stupid to try and cover that on credit cards to "save" my credit, or is it just a lost cause at this point?</p>
 
Do you mean you are worried about your mortgage not being paid off completely? You don't really need any more credit card debt, so here is what I would do: talk to the lender about the short sale (after, of course, you get an offer on your house) and say they either take that or you walk and let them foreclose. Most lenders would prefer to take a loss of around 20K than to get a house on their hands that they can't sell (and might end up with taking a loss of 100K or more instead of 20K). Good luck!
 
<em>"Hypothetically let's pretend I list and get a reasonable asking price where I'm looking at a shortfall of $20k or so, am I stupid to try and cover that on credit cards to "save" my credit, or is it just a lost cause at this point?"</em>





That is a tougher question. You can assume the debt and work out a payoff with your lender for the shortfall. They will be happy to do this as it means they won't lose the money. I suspect this would still show up on your credit report, and carrying $40K in debt will lower your FICO score because your debt load will be very high. The question you would need to ask then is there any hope of paying off $40K? If it would take you 7-10 years paying if off -- and living on Ramen noodles while doing it -- then it may not improve your situation much.
 
It's advised on a short sale listing agreement addendum that you talk to an attorney or tax consultant regarding tax and credit consequences. The lender may view the shortage as a profit and may tax you on the difference. If you have a second lien holder, they may ask for an unsecured promissory note anywhere from $10K- $50k to be paid over 10 -20 years. The terms are usually pretty favorable.
 
IR said: "If it would take you 7-10 years paying if off -- and living on Ramen noodles while doing it -- then it may not improve your situation much."





I disagree. Adversity and living up to your word both build character.
 
"<em>I disagree. Adversity and living up to your word both build character</em>"





Give me a break, i would rather AV paperboy live a relatively stress free life over the next 7-10 years with little debt and build up his cash account than to build character.
 
<p>Yup. See my earlier comment.</p>

<p>Actually, this displays some interesting psychology. When it is a bunch of anonymous walking people, we say baaaad baaad people. Smack their hands. Reproach them. Etc.</p>

<p>But when it is ONE walking person, with a sympathetic manner, we say, poor guy, it's just business, do what makes you feel good (!) the bad bank shouldn't have made the loan and so on.</p>

<p>Same thing as one homeless kid getting way more money than 5 homeless kids.</p>

<p>In a Travis McGee novel, I read a rule of thumb that I find more useful than most of the stuff in religious works, to wit:</p>

<p>When confronted with a moral decision, choose the one that makes you feel bad, and you will almost always be making the right decision.</p>
 
<em>When confronted with a moral decision, choose the one that makes you feel bad, and you will almost always be making the right decision.





</em>wait, is that right? sometimes when driving and i see a kid crossing the road, its fun to speed up and watch them get startled and start running. it makes me feel kinda bad but i guess speeding up is the right call?
 
Ill tell a bunch of walking people the same thing Im telling AV, has nothing to do with the quantity, at least for me. The way I look at, we all make decisions and we live with the consequences of those decisions. You get one life to live, would you rather spend 7-10 years of that life "building character" and living like sh*t, or being happy and being relieved of a horrible financial burden.
 
<em>"But when it is ONE walking person, with a sympathetic manner, we say, poor guy, it's just business, do what makes you feel good (!) the bad bank shouldn't have made the loan and so on."</em>





It is very interesting indeed. What do we do with the people who got caught up in this mess and were not motivated by greed? It is also difficult to chastise people for the morality of failing to follow through on their financial agreements given the conduct of the lenders during this fiasco. I doubt anyone who facilitated these individuals are losing much sleep over the situation they created.





Would the advice be different if AV Paperboy was greedy and admitted his greed when buying the house? Probably. When we punish criminals, intent is a huge factor in determining the punishment.





The problem with this mess is the financial repercussions are so severe that it would take a lifetime of sacrifice for an individual to fix the problem and be morally correct. These are the situations bankruptcy was intended to fix. Should someone be forced to give up all their extra income for 10 or more years for a single mistake? Does the punishment fit the crime?
 
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