It is crunch time.
Your income is down, your expenses are not.
Your 401(k) is tapped out.
Maybe you already filed bankruptcy, or your case is still pending.
You are emotionally invested in your home, even if it looks like the foreclosed Detroit home in the picture.
All of us homeowners are.
Maybe we inherited it, or bought it from our parents.
Maybe, like one of my clients, your in-laws built the house you wanted.
Your kids are friends with the neighbors’ kids, you like the schools, you like the location.
As human beings, we make many, if not most, of our decisions based on our emotions.
We avoid things that hurt and seek things that feel good.
It feels horrible not to be able to pay for your home.
It feels bad when the mortgage company will not work with you, keeps asking for the same paperwork over and over, lose your file, start a foreclosure while you are still working on a modification, and so on, and so on.
The modification process can drag on forever.
I was at a bankruptcy seminar yesterday.
A judge from the Western District talked about a homeowner who wanted to keep a mobile home worth $17,000, but he owed $36,000.
He was already in Chapter 7which is, and should be, a last resort.
No one wants to file bankruptcy.
This man was before the Judge on a hearing to reaffirm the $36,000 debt.
Reaffirmation is the process by which a bankruptcy debtor again becomes personally liable on the debt.
The Judge asked the same question I do in these circumstances: If you were driving by this place, would you say to yourself, hey, there is a great $17,000 mobile home, let me go in and pay $36,000 for it.
The debtor said no, of course not.
He also said, I really want to move to Grand Rapids.
The Judge asked, then why do you want me to approve this agreement, that will allow the creditor to sue you if you do not make all the payments, when you do not even want to live there, and it is way underwater?
The debtor said, because, he would feel like a complete failure if he even lost his home, having lost everything else.
The Judge did the right thing, and did not approve the agreement.
These are tough times, and we all have tough decisions to make.
We have to look at the big picture, and we have to think long term.
Do we really have the ability to carry out this decision, to?
What are the consequences for me and my family?
Millions of Americans have been foreclosed, and millions more will be.
It does not make you a worthless human being, there are much worse things that can happen.
Ask a paralyzed veteran.
Keep My Home, At What Cost?