Walking away from mortgage- please no flames here just advise or experiences

[ReneeA]

I have seen it first as the town I was born in took the same dive that Detroit did. They just did it before I was born.

I agree we will have to agree to disagree but the reason is that you do not want to admit the fact even when you present them.

There isn't anyone left here to buy the amount of homes for sale. They left for the jobs in other states - that flight out started over 5 years ago. The home prices began to fall at that point. The last 4 years, homeowners cannot compete with all the foreclosures and short sales in their neighborhoods. On my street, we have almost 10% of homes empty right now. Why would someone in the market for a home buy my house for $50,000 (let's just throw that out there, it's actually worth wayyy less than that now and we owe more than that) when there is a home down the street that may need some cosmetic work they can get for $7,000? That's no exaggeration...that's what homes are selling for right now in this area.

 

[Juliet25]

[QUOTE/]I realize it's a defensive mechanism to say, "Well, those people are stupid. And greedy. That's why they are in so much trouble." But the truth is, unemployment will torpedo ANY family quickly ...and you, or your neighborhood, could be next.[/QUOTE]

ITA. I can't get over how holier-than-thou people get on these threads. In my family's case, we experienced our first child's birth, followed six month's later by a cancer diagnosis in DH, followed six months later by me losing my job, followed a year later by DH losing his job. The chances of all those things happening to a young, college- and law-school educated couple in their 20's are pretty low, but there we were.

The most positive spin I can put on it is that I cannot work up any outrage against people who find themselves in bad circumstances. Stuff happens, and you just can't plan for everything. Compassion and *constructive* advice goes much further than "this would never happen to me b/c I did x, y, and z."

 

[deerhart]

[QUOTE/]

ITA. I can't get over how holier-than-thou people get on these threads. In my family's case, we experienced our first child's birth, followed six month's later by a cancer diagnosis in DH, followed six months later by me losing my job, followed a year later by DH losing his job. The chances of all those things happening to a young, college- and law-school educated couple in their 20's are pretty low, but there we were.

We got married out of college, bought a house (had a down payment) had a decent amount of equity. 1 week after closing on the house I was diagnosed with pre-eclampsia and placed on bedrest and promptly fired from my job. I was out of work for six months and our entire savings was gone within 4 months, so we had to live on credit cards for 2 months. Went back to work (making more money!) and paid down the debt for the next 18 months. Got pregnant again, oldest starts having MAJOR issues, I go part time (28 instead of 35 hours) (both Ped and my ob/gyn orders). That's okay, we are getting by things are just a bit tight. Uh oh diagnosed AGAIN with preeclampsia, bedrest for the last 12 weeks of my pregnancy (turned out to be only 8 since I had to deliver early) and no paid maternity leave (sigh). Okay that was a sting, but we were prepared and got by without problems. Baby is born, hubby gets called back in to work off his leave for a Friday meeting (1 week after birth) to be told his company is going under and they are all losing their jobs (jaw drop).

I go back to work 1 week before he loses his job (about 2.5 months after birth). He's unemployed for 11 months and ends up getting a job making HALF his previous pay. Absolutely dead in the water and yes we ware well educated individuals (DH just happened to be in the IT/internet business when the bubble burst and had to switch careers and start at the bottom again). Not to mention all the doctors, testing, and specialists we had to see for the oldest child Then we lose most of the equity in the house due to the toilet breaking, overflowing and ruining the floor of the bathroom, our bedroom, running down into the bottom level (split level house), all inside the walls and into the garage. Of course, no one can come out to do anything for 5 weeks, not even to bring dryers (did I mention I have a HUGE mold allergy), so the whole thing molds (YEAH US). Did I mention that the transmission on our car died 6 weeks after DH was laid off.... Yes it just piled on....

This is why DH and I know that our marriage is extremely strong. If we survived THAT all within the first 5 years of our marriage, we can survive anything!

 

[zalansky]

Interesting article encouraging homeowners to walk away from mortgages with negative equity:

http://www.housingwatch.com/2010/01.../01/25/the-new-mortgage-revolution-walk-away/

To the OP, hugs!

 

[Purseval]

Interesting article encouraging homeowners to walk away from mortgages with negative equity:

http://www.housingwatch.com/2010/01.../01/25/the-new-mortgage-revolution-walk-away/

Interesting article. The article recommends walking away to change the way banks think about lending money. Why stop there, all that does is reward people who are losing money on houses they owe on. What about the millions of people who paid off their mortgages or are close to paying them off? They should consider a mass robbery of the banks so they can go back to the equity they originally had.

And what about those people with pension plans, 401k's, etc.? A lot of them took a massive hit last year. It's recovered a bit but it could head down again. They should pass a law so stocks can only go up in value, not down, that would change the way people think about investing.

Groceries, can you believe the prices? Something should be done about it, make it legal to loot any market that charges too much for a loaf of bread. That would change the way marketers think about consumables.

I'd love to say the US could set an example for the rest of the world but I think Venezuela is beating us to the punch. I hear it's working wonders for their economy

 

[HHSTigerFan]

Do you really think food stamps give people enough money for a month of good healthy food?? If you think that then you are living in a fantasy land. The food stamp program does NOT give a family enough food to eat healthy for a month and not go hungry.

In Illinois, the max benefit for a family of 4 is $668, thats more than our family of four spends. When I see a person paying using food stamps, 9 times out of 10 they have more name brands in their cart than I have in mine.

 

[deerhart]

In Illinois, the max benefit for a family of 4 is $668, thats more than our family of four spends. When I see a person paying using food stamps, 9 times out of 10 they have more name brands in their cart than I have in mine.

That's because many states (for reasons that don't make much sense) don't put generic food on their food stamp lists but have tons of brand names on it

Due to the state of the economy over the last 2 years, the state I live in has removed most of the brand name foods and put the store brand generics on the lists. They removed cheerios, eggo waffles, and a whole bunch of other items and now the folks have to buy the store brand cheerios.

The result of that is that the brand name items have dropped drastically in price to where they are almost cheaper then the store brand now.

 

[MrsPete]

You do realize that the # 1 reason for mortgage defaults and personal bankruptcy is medical bills and not "Fiscal irresponsibility".

This can actually be taken two ways:

A person with an optimistic view of this topic would say that these people were doing fine -- working, saving money, getting ahead financially -- until they became sick, and then it all fell apart. They'd say that anyone in the situation would do the same thing.

A person with a negative view of this topic would say that the person was living so close to the financial edge that a single crisis -- an illness -- caused them to default on their bills. They'd say that a person who was better prepared would have been able to pull through.

In all truthfulness, without having seen the study in question and without having seen the questions that were involved, we cannot say which is true. It's very easy to lie with statistics.

 

[deerhart]

Thsoe medical problems may have been what took down the house of cards they built but the financial condition may have been precarious before the medical condition occurred. With the know savings rate of less thanm 0% in the US and the recent us of the house as an ATM this should be a surprise.

A feather can bring down a house of cards. One needs a strong foundation to handle the bird sitting on your roof.


Buildings can collapse because of an earthquake. Not having built the buildings to earthquake standards in an known earthquake zone will cause way more to collaspe than should have.

Again, that is a valid argument, but in my experience in dealing with these issues the reality is much different.

I do quite a bit of social security disability cases and have worked in that area since 2004. The AVERAGE wait time nationwide for a disability case to go to hearing is 2 years. This is after you have already gone a year at the initial (and if a non-protype state recon) level. So three years from the time you APPLY until benefits for the average recipient. To put the stats into even more perspective, about 70-80% of those that go to hearing are approved for Social security benefits. About 70% of those denied appeal. Of all those that apply, about 15% nationwide are approved initially (depends on the state and what SSA is trying to do. Some states have target goals of 40% initial approval but still fall very short at only about 20-25% in reality). In some states, initial approval rate is less then 5%. In those areas you pretty much have to by terminal (and even then its difficult). There are some places in this country were the wait for a hearing is between 3-4 years.

Many of my clients were doing fine prior to the medical issues. By the time some of them get to me (1-2 years into the process) they are on the verge of bankruptcy, losing or already lost their home, and it just gets worse. Savings is being wiped out at extraordinary rates to cover medical bills, pay COBRA, AND replace the lost income. I spend a good chunk of my time counseling clients on downsizing (I do the same thing with my divorce clients as well).

I do get the opportunity to see financials over a period of time with many of my clients. Its very interesting and easy to see what leads people to the situation they are in. For example, we have a number of car manf. around here and the plants are closing/laying off. I have seen the incomes of a number of clients and 3 years ago they were making 2-3 times their salary due to overtime and they had been making that much for years (10+ years for many of them). Now they suddenly lose half their income, but can't downsize due to debt, the housing market crashing (and houses not selling at all) etc..

 

[deerhart]

This can actually be taken two ways:

A person with an optimistic view of this topic would say that these people were doing fine -- working, saving money, getting ahead financially -- until they became sick, and then it all fell apart. They'd say that anyone in the situation would do the same thing.

A person with a negative view of this topic would say that the person was living so close to the financial edge that a single crisis -- an illness -- caused them to default on their bills. They'd say that a person who was better prepared would have been able to pull through.

In all truthfulness, without having seen the study in question and without having seen the questions that were involved, we cannot say which is true. It's very easy to lie with statistics.

If its a SINGLE occurrence, with decent medical coverage and limited missing of work and it takes a person down, its the 2nd choice. if its a prolonged illness, high medical bills, etc then its the first.

NO ONE can prepare for extended medical crisis. Even with long term disability insurance (which generally only pays you 66%) most people find it difficult to survive this intact (unless they are independently wealthy). Further, the younger you are, the harder this will hurt you, because you haven't had the years to build up an amount of savings to handle it

Many of the studies look back several years to see what financial status the people where in before the crisis occurred and they look at what occurred with the crisis.

The question to ask yourself is how long your family would survive if your primary breadwinner had a medical crisis today and could no longer work. A good majority could survive several months, just as many people who do end up declaring bankruptcy or defaulting. The problem is, these things don't tend to last just a few weeks, but rather years. Then, if you survived that, the medical bills now start pouring in!

 

[singnring]

In Illinois, the max benefit for a family of 4 is $668, thats more than our family of four spends. When I see a person paying using food stamps, 9 times out of 10 they have more name brands in their cart than I have in mine.

Please keep in mind that just because the max is a certain dollar amount, it does not mean that everyone gets that amount.

There are a lot of figures and variables which go into the determination of how much a person receives. There are a lot of calculations that are made based on many different factors, and that decides your amount of benefit.

My daughter has had to go on FS recently due to her job loss in the economy.
Now, someone may look at her FS allotment and think she gets more than enough. But even though there are three in her home, she only gets benefits for herself and her youngest son. Because she has shared custody (supposedly 50/50) of her second son, she cannot get benefits to help feed him.

And by the time she pays for baby food and milk for the youngest, there isn't much left.

I know many people are out there abusing the system, but please don't make snap judgments about a person based on what you may observe at the grocery store.

 

[tinker&belle]

///

 

[wdwfan16]

Again, that is a valid argument, but in my experience in dealing with these issues the reality is much different.

I do quite a bit of social security disability cases and have worked in that area since 2004. The AVERAGE wait time nationwide for a disability case to go to hearing is 2 years. This is after you have already gone a year at the initial (and if a non-protype state recon) level. So three years from the time you APPLY until benefits for the average recipient. To put the stats into even more perspective, about 70-80% of those that go to hearing are approved for Social security benefits. About 70% of those denied appeal. Of all those that apply, about 15% nationwide are approved initially (depends on the state and what SSA is trying to do. Some states have target goals of 40% initial approval but still fall very short at only about 20-25% in reality). In some states, initial approval rate is less then 5%. In those areas you pretty much have to by terminal (and even then its difficult). There are some places in this country were the wait for a hearing is between 3-4 years.

Many of my clients were doing fine prior to the medical issues. By the time some of them get to me (1-2 years into the process) they are on the verge of bankruptcy, losing or already lost their home, and it just gets worse. Savings is being wiped out at extraordinary rates to cover medical bills, pay COBRA, AND replace the lost income. I spend a good chunk of my time counseling clients on downsizing (I do the same thing with my divorce clients as well).

I do get the opportunity to see financials over a period of time with many of my clients. Its very interesting and easy to see what leads people to the situation they are in. For example, we have a number of car manf. around here and the plants are closing/laying off. I have seen the incomes of a number of clients and 3 years ago they were making 2-3 times their salary due to overtime and they had been making that much for years (10+ years for many of them). Now they suddenly lose half their income, but can't downsize due to debt, the housing market crashing (and houses not selling at all) etc..

That Debt was their house of cards. One should never expect or plan on OT to pay their bills or to buy stuff on credit and then plan to pay it off with future OT money. That is poor finacial planning.

As to the rest, that is why people need to get LTD and LTC insurance and maybe even STD insurance. This would buy them time to downsize, get on SSDI and not go under. Again this is part of poor financial planning. Now you will tell me they did not have the money for the insurance. Then they were not buidling a strong foundation and living on the edge already.

DH and I got our LTD insurance 2 or 3 years after we got married. We also got life insurance. All this we did before we bought a house. We wanted our future build on more than just clay.

We in this country want it all and when it falls apart we want the government to put it all back for us.

I will never end up in the situations you described because we have back up plans in place to buy us time to sell our home, get money (via the LTD and/or LTC) etc until we can also get SSDI.

We may have to live a much simpler life with no luxuries but we will be able to keep going.

Sadly many in the US only think for the moment and have a great time in the moment.

 

[wdwfan16]

Although that may be true in some cases, I would guess that is not the deciding factor in most medical situations. We just got an estimate of the surgery for my DD this fall. For one surgery which is fairly routine the discounted insurance rate is $60,000. We have a deductible and Max OOP so we won't have to pay all of it, but I doubt very few have $60,000 laying around that won't grossly affect their net worth.

However the hospital DOES offer discounting and takes credit cards and car loans into account. So it doesn't really help families living within their means.

On does not need to pay the entire $60K at once. You can negotiate a payment with the hospital that you may pay on for 10 or more years. You can also apply for hardship write-offs. Most hospitals and Dr. have a certain amount that they will be able to help you with. The key is the patient or guardian must initiate the conversation.

 

[BellePrincessBelle]

That's because many states (for reasons that don't make much sense) don't put generic food on their food stamp lists but have tons of brand names on it

Due to the state of the economy over the last 2 years, the state I live in has removed most of the brand name foods and put the store brand generics on the lists. They removed cheerios, eggo waffles, and a whole bunch of other items and now the folks have to buy the store brand cheerios.

The result of that is that the brand name items have dropped drastically in price to where they are almost cheaper then the store brand now.

There are no restricitons on brands for food stamps(SNAP) benefits. As long as it's edible & not for immediate(hot/prepared) consumption they can buy it. The state does not regulate the brands. WIC is a different beast.

 

[BellePrincessBelle]

On does not need to pay the entire $60K at once. You can negotiate a payment with the hospital that you may pay on for 10 or more years. You can also apply for hardship write-offs. Most hospitals and Dr. have a certain amount that they will be able to help you with. The key is the patient or guardian must initiate the conversation.

Reality doesn't work that way. Yale New Haven(lawsuits against them) has attatched pay checks and put leins on peoples houses. Most hospitals I know do NOT make payment arrangements if you have a paycheck they will sue you and attatch your paycheck even if you are making payments because they do not work with you. My current home had a lein on it from Lawrence & Memorial Hopsital when we bought it because the owner had some medical bills and they wouldn't accept payments. I also know people who have had 2/3 of their pay seized to pay high medical bills. It would be wonderful if life really worked the way people think it does.

 

[bettymae1121]

If its a SINGLE occurrence, with decent medical coverage and limited missing of work and it takes a person down, its the 2nd choice. if its a prolonged illness, high medical bills, etc then its the first.

NO ONE can prepare for extended medical crisis. Even with long term disability insurance (which generally only pays you 66%) most people find it difficult to survive this intact (unless they are independently wealthy). Further, the younger you are, the harder this will hurt you, because you haven't had the years to build up an amount of savings to handle it

Many of the studies look back several years to see what financial status the people where in before the crisis occurred and they look at what occurred with the crisis.

The question to ask yourself is how long your family would survive if your primary breadwinner had a medical crisis today and could no longer work. A good majority could survive several months, just as many people who do end up declaring bankruptcy or defaulting. The problem is, these things don't tend to last just a few weeks, but rather years. Then, if you survived that, the medical bills now start pouring in!

Or even one BIG medical crisis. My boss's DH died a few years ago (poor sweet man! ) and for about 24 hours of care (from the time he dialed 911 to the time he passed away the follwing day) was $500,000.

Yup, one half million dollars. Had he lived it would have been closer to a full million, as he would have easily been hospitalized for a days or even weeks, given what was going on with him.

Now, my company's insurance plan covered that 100%. But what if it hadn't? What if it was 80/20? She could have owed six figures in medical bills. Who has that kind of scratch laying around?

 

[wdwfan16]

Reality doesn't work that way. Yale New Haven(lawsuits against them) has attatched pay checks and put leins on peoples houses. Most hospitals I know do NOT make payment arrangements if you have a paycheck they will sue you and attatch your paycheck even if you are making payments because they do not work with you. My current home had a lein on it from Lawrence & Memorial Hopsital when we bought it because the owner had some medical bills and they wouldn't accept payments. I also know people who have had 2/3 of their pay seized to pay high medical bills. It would be wonderful if life really worked the way people think it does.

That has not been my experience. Our hospital, we have had a few surgeries the last few years, give discounts, writes-off some debt to hardship and has payment plans. As a matter of fact that is true for all the hospitals in our area.

 

[BellePrincessBelle]

That has not been my experience. Our hospital, we have had a few surgeries the last few years, give discounts, writes-off some debt to hardship and has payment plans. As a matter of fact that is true for all the hospitals in our area.

Here's how it works around here
http://www.conntact.com/archive_index/archive_pages/4725_Business_New_Haven.html Quotes from another article
As a tax-exempt, non-profit hospital system, Yale New Haven Health has an obligation to provide charitable health care to people in our community who need it. However, by its abusive debt collections practices, its refusal to make millions of dollars in free care available to many in need and the refusal of its Board of Trustees to be accountable to the public they claim to serve, YNHH has failed its charitable mission.
Despite YNHH’s claims that they have corrected the above practices, the abuses continue. It is clear that YNHH’s misdeeds are not simply a series of individual errors or oversights, but rather a crisis of YNHH’s policy and system.

 

[wdwfan16]

Here's how it works around here
http://www.conntact.com/archive_index/archive_pages/4725_Business_New_Haven.html Quotes from another article
As a tax-exempt, non-profit hospital system, Yale New Haven Health has an obligation to provide charitable health care to people in our community who need it. However, by its abusive debt collections practices, its refusal to make millions of dollars in free care available to many in need and the refusal of its Board of Trustees to be accountable to the public they claim to serve, YNHH has failed its charitable mission.
Despite YNHH’s claims that they have corrected the above practices, the abuses continue. It is clear that YNHH’s misdeeds are not simply a series of individual errors or oversights, but rather a crisis of YNHH’s policy and system.

OK. So what do you want me to do about it?