Chapter 13 Bankruptcy an Option for Atlanta Residents Considering a Strategic Default
As kids, we're taught that it's wrong to walk away from our problems. But as adults, many of us are doing just that by walking away from our mortgages.
Years of falling real estate prices have resulted in a large number of underwater homeowners - borrowers who are locked into a loan for more than what their home is now worth.
Those most negatively affected are young people who bought at the peak of the market and older adults who had been hoping to downsize in retirement. Hard economic times make the high payments a stretch, yet homeowners can't sell their homes without handing over a fat check to the lender.
In a situation they seemingly can't win, many are simply calling it quits. In a move termed "strategic default," they're ceasing mortgage payments and sending their house keys back to the bank.
Unfortunately, Atlanta bankruptcy attorneys have seen many clients suffer credit setbacks and even litigation as a result of defaulting on home payments. Many of these homeowners could have saved money, stress, and their home with an Atlanta bankruptcy filing.
According to MSNBC.com, walking away is easier than ever because modern homeowners feel little connection to their lenders. And it's not entirely our fault.
Many folks receive their original loan from a large national bank. Afterward, the loan may be broken up and sold to multiple anonymous investors. Often times, people seeking a loan modification aren't able to track down who currently owns their mortgage. No wonder the process feels so impersonal.
But it becomes personal when you walk away.
Defaulting on mortgage payments can drastically drop your credit score, making it difficult to find a rental, qualify for credit, and get approved for affordable interest rates. To make matters worse, lenders are beginning to aggressively seek court-ordered repayments for homeowners who walk away.
Before you make a life-changing decision like defaulting on your mortgage, make sure to consider how it will affect you down the road. Sure, giving up those mortgage payments might lighten the load today. But you're still going to have to pay rent in the future. If you ever want to buy another home, a history of default isn't going to do you any favors. And if you have other debts to deal with - like credit card debt - they aren't going to go away on their own.
Bankruptcy has the potential to improve your financial situation so that you can better handle those mortgage payments. Chapter 13 bankruptcy can protect your home from foreclosure - no matter how many mortgage payments you've missed - and reorganize your unsecured debts into more manageable payments. If you qualify for Chapter 7 bankruptcy, it's possible to wipe out unsecured debts entirely.
Take the time to discuss your situation with a professional before making your decision. With an Atlanta bankruptcy, you don't have to walk away from your financial problems - you can solve them.
More Blog Entries:
How Atlanta Bankruptcy Filings Can Improve Consumer Finances in 2012: January 1, 2012
As Home Prices Fall, More Borrowers Walk Away, by John W. Schoen, MSNBC.com