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This is a tough situation. I experienced a similar situation. Do not rule out strategic default. If the property is an endless money pit, walking away is in your best interest. If u are married and hold property in both u and your wifes name, that would be beyond the reach of your creditors. Any assets in your wife's name is beyond creditors. Any money held in joint accounts is beyond creditors. All retirement accounts is beyond creditors. If u and your wife have another home in both your names that cannot be seized. You can be sued for deficiency judgements in Florida. Once awarded u could be subject to wage garnishment, however the amount is limited by law if u are head of the household. Sometimes banks won't bother to sue but given your credit score they may think they can recover money from u. If you have many exempt assets then defaulting and then declaring bankruptcy could be a good option. It would wipe out any legal liability to pay back the debt. Talk with the lawyer but those are the basics. Being married but having the mortgage in your name only really helps u out. Don't feel bad about defaulting--the big name banks do it all the time when their real estate investments sour. Goldman Sacs defaulted on a 2 billion apartment complex loan in New York. What is outrageous is in those situations these banks cannot be sued for a deficiency but as individuals we are one the hook.
Can one incorporate ones self, do a strategic default and then file banckruptcy and be immune from law suits, garnishments and deficiency judgements?
Can one incorporate ones self, do a strategic default and then file banckruptcy and be immune from law suits, garnishments and deficiency judgements?
You don't have to incorporate to do that. You can't move the liability for the mortgage from personal to corp without paying it off anyway. Some attempts to game the system can be considered fraud and destroy bankruptcy protection. After a free consultation with bankruptcy/consumer attorney you will know what your real options are.
Can one incorporate ones self, do a strategic default and then file banckruptcy and be immune from law suits, garnishments and deficiency judgements?
Incorporation will not help u. However with bankruptcy
-- wage garnishment ends
-- any deficiency judgement is zeroed out
With a strategic default, you cut your liability immediately. The bank then has to decide whether to sue. What is interesting is that in some states (CA,WA,ND and others but NOT FL) banks cannot sue. The key is to meet with a bankruptcy attorney. If u have many so-called exempt assets, u have nothing to loose. Default and see what happens. If they sue u bankrupt yourself. In FL the entire value of your home is exempt so that can never be seized.
The other situation where bankruptcy can help is if u have an underwater mortgage with a 1st and a 2nd mortgages. If u qualify for chapter 13 bankruptcy the entire balance of the 2nd mortgage can be completely eliminated and if u can pay the 1st mortgage u can keep your home.
U can move assets around to make it more difficult for creditors to seizure. This often makes them willing to settle for pennies on the dollar. Under the law, creditors can claim these transfer are "fraudulent" but they have to prove it which is expensive for them. Please recognize that these "fraudulent transfers" are NOT criminal offenses for which u can be jailed or convicted.
The bottom-line is that there options. Don't be a debt slave to bank. They are going to act to maximize their profit. Don't be afraid to act in your best financial interest. A bankruptcy attorney is generally the best place to start. Some attorneys also specialize in asset protection but in most cases that is not needed if you are good candidate for either a chapter 7 or 13 bankrupty.
U can move assets around to make it more difficult for creditors to seizure. This often makes them willing to settle for pennies on the dollar. Under the law, creditors can claim these transfer are "fraudulent" but they have to prove it which is expensive for them. Please recognize that these "fraudulent transfers" are NOT criminal offenses for which u can be jailed or convicted.
The bottom-line is that there options. Don't be a debt slave to bank. They are going to act to maximize their profit. Don't be afraid to act in your best financial interest. A bankruptcy attorney is generally the best place to start. Some attorneys also specialize in asset protection but in most cases that is not needed if you are good candidate for either a chapter 7 or 13 bankrupty.
The past ten years we enjoyed an economic expansion based purely on the use credit. Unfortunately it is time to pay the piper, the poor decisions people have made or loss of incomes have now trumped what is morally right and what analitically is the right thing to do.
The new buzz word for this is "STRATEGIC".
I have a few friends and family that are sitting on underwater properties.
Some as much as $100,000.00. Most at a higher interest rate and most likely have to be in their homes another ten years before they could even hope to sell and break even. They have no option of a refi because of the current house value. Some are young with their whole lives ahead of them and some are within a few years of retirement and have lost everything trying to stay in a home they now can not get out of or afford to live in because of a loss of one income.
It's a tough decision to make and pardon the pun but it is getting more and more fashionable for people to walk away. Only you and your family can weigh the options after talking to a competent attorney who can break it all down for you.
For my two cents, I would never file for bancruptcy if I could still pay my bills and just wanted to walk away from an underwater home. There is no easy way out and the decision you make might follow you and your family for quite a long time. Your banking opportunities will change along with your ability to finance a car, credit limits on credit cards and even obtaining insurance for house and vehicles.
This mess was't all about the evil banks, we (consumers) all played a part in this too. The FEDs warned and advised the banks about a year and a half before the crash to re-appraise their loan portfolio's to ensure they had plenty of cash to cover potential losses. Blame goes all around.
Good luck for whatever you decide, its takes a toll on you and the stress of being trapped in a house you can not get out from under in the immediate future can wear you out mentally on a daily basis.
The past ten years we enjoyed an economic expansion based purely on the use credit. Unfortunately it is time to pay the piper, the poor decisions people have made or loss of incomes have now trumped what is morally right and what analitically is the right thing to do.
Personally, I don't have much sympathy for people who jumped into the housing market without some forethought as to how they were going to maintain a mortgage, the exception being those who subsequently lost their jobs or suffered some other kind of misfortune. I feel that people should make their own bed in life and deal with the consequences. This is not a dig at the OP.
But the problem is that these same people who are now walking away from their mistakes and all of these foreclosures are affecting the rest of us next door by lowering the value of our homes. And we are the ones who played it by the rules of common sense.
The only solution is for the Fed to FORCE the banks to restructure these underwater mortgages once and for all. I don't care how they do it. There is no other solution.
The problem, though, they are people in the government who don't want the Fed to intervene in any kind of arm-twisting of the private sector. They forget that a lack of controls is how we got here in the first place. Until then, the whole economy is screwed along with these homeowners..
Personally, I don't have much sympathy for people who jumped into the housing market without some forethought as to how they were going to maintain a mortgage, the exception being those who subsequently lost their jobs or suffered some other kind of misfortune. I feel that people should make their own bed in life and deal with the consequences. This is not a dig at the OP.
But the problem is that these same people who are now walking away from their mistakes and all of these foreclosures are affecting the rest of us next door by lowering the value of our homes. And we are the ones who played it by the rules of common sense.
The only solution is for the Fed to FORCE the banks to restructure these underwater mortgages once and for all. I don't care how they do it. There is no other solution.
The problem, though, they are people in the government who don't want the Fed to intervene in any kind of arm-twisting of the private sector. They forget that a lack of controls is how we got here in the first place. Until then, the whole economy is screwed along with these homeowners..
Simple fix would be for the goverment to intervene and mandate the banks to provide simple interest loans (3-4%) to underwater homeowners for a period of 5 years. The original mortgage principle stays the same which the bank would still get and in turn the homeowner would be able to whittle down the principle quicker. The Fed would offset the banks ammoritized loss of interest by giving a tax credit for that amount of loss. At the end of the five years the mortgage would revert back to the given (national average) interest rate at the time of the simple interest refi. The Fed would also cover up to $2500.00 in fees for each transaction (closing). I am one of the ones not in trouble, but hey something has to be done.
Simple fix would be for the goverment to intervene and mandate the banks to provide simple interest loans (3-4%) to underwater homeowners for a period of 5 years. The original mortgage principle stays the same which the bank would still get and in turn the homeowner would be able to whittle down the principle quicker. The Fed would offset the banks ammoritized loss of interest by giving a tax credit for that amount of loss. At the end of the five years the mortgage would revert back to the given (national average) interest rate at the time of the simple interest refi. The Fed would also cover up to $2500.00 in fees for each transaction (closing). I am one of the ones not in trouble, but hey something has to be done.
For this to happen we would need to have a Congress in place that cares as much for Americans in trouble as it does for the rich and big business. But I guess this discussion is for another forum.
For this to happen we would need to have a Congress in place that cares as much for Americans in trouble as it does for the rich and big business. But I guess this discussion is for another forum.
That is the thing about assets bubbles and debt--ultimately some one is going to have to "take a haircut." Unfortunately the policies to date have largely exempted Wall Street and big bank interests at the expense of Main street America.
The whole situation sucks for everyone. We all know there is blame to go around (on both sides):
-Government is to blame for making it possible to package and sell loans all of those years ago. They also pushed for more home ownership by forcing banks to do a certain amount of different types of loans.
-Wall Street is to blame (in my eyes the worst offenders) as they pushed the government to all them to buy/sell mortgages. They pushed banks for more notes (even when they knew darn well what was going to happen). Then they pulled out right before they lost all of the money and left the banks and homeowners holding the bag.
-Borrowers are to blame for borrowing too much money.
-Government is doing absolutely NOTHING to solve the problem (this administration or the previous one). They have too much to lose to make the hard decisions. Can't **** off te people giving them money to get elected/re-elected...
However, I've heard sentiment from a LOT of people (not so much around here) about (essentially), people who are doing this (defaulting/filing for BK) are wrong for doing so. I scratch my head at this because nobody talks about businesses for being wrong when doing these things--defaulting on loans/filing for BK--for some reason, it's ok for a business to do this but not a person.
I get it, when it's just a person (or family), it's a personal thing. Not some conglomerate. But it's the same thing. If a business gets in trouble, they stop paying their bills and file for BK. It's perfectly acceptable for people to do the same otherwise there wouldn't be the laws/etc in place to allow people to do so.
If it makes sense, I can understand it. Does it hurt the rest of us? Absolutely, however, there are a lot of other things which are hurting us as well.
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