Plenty of Reasons NOT to Modify Your Mortgage

More news on mortgage modification trends. The WSJ reports that borrowers who receive a permanent mortgage modification still have lots of other debt. The median ratio of total debt payments to pretax income stands at 63.5%.  This means 20% of borrowers  (or more) with permanent modifications are likely to re-default, primarily because of those high debt [...]

Let’s Not Over-use “Strategic Default”

We’ve had a few new potential clients who’ve contacted us recently, wanting to talk about “strategic default.” Strategic default is the term used to describe a property owner’s decision to stop making mortgage payments and otherwise default on his or her obligations to the lender, despite having the ability to afford it. In our law practice, [...]

Student Loans and Bankruptcy

On April 15 of this year The Private Student Loan Bankruptcy Fairness Act of 2010 was introduced to the House of Representatives calling for certain student loans to be eligible for discharge under bankruptcy. Time will tell whether the Act becomes law; if it does, it is likely to undergo substantial revisions prior to passage. [...]

Dealing With The IRS

Did you file for an extension on your income taxes? If you did so because you owe the government more than you can afford to pay, USAToday ran a good article on how to proceed. The best advice may be in this paragraph about installment agreements: You’ll have to pay interest on the unpaid amount [...]

Strategic Default: Part 3 of 3

Here are three common questions asked of my partner, Rick Mitchell, and me by homeowners considering defaulting on their mortgages. I can’t afford to pay my mortgage and my other bills. The house is under water. I’ve asked for a modification. How long do I have to decide whether strategic default is an option? I [...]

Debunking Strategic Default Myths

Myth: strategic default is limited higher-income debtors. In our experience, clients across the income spectrum have considered and engaged in strategic default. Myth: strategic default is limited to investment properties. In our experience, clients have strategically defaulted on primary residences as well as investment/rental properties and commercial properties. Myth: lenders are eager to avoid foreclosure [...]

Strategic Default: Part 2 of 3

The term “strategic default” has been in the news. With 25% of American homes valued at less than the balance of the mortgage, and some of those “underwater” mortgage holders out of work it’s no wonder. For those who can’t stay up late enough to watch Stephen Colbert, here’s a video clip on this subject. [...]

Strategic Default: Part 1 of 3

“Strategic default” is a conscious decision by a borrower to stop paying the mortgage(s) on a real property even though the borrower can afford the payment(s). It can happen for a number of reasons and is not a decision to be made lightly or without education about the legal, tax and credit consequences. We have counseled [...]

Creditor Protection Without Bankruptcy

With so many people unwinding unprofitable businesses and adjusting their lifestyles after financial hardship, many are confused about assets a creditor can seize and if bankruptcy is the only way to protect themselves from the proverbial wolves at the door. While we offer general information here, it is not comprehensive and not intended as legal [...]

Can a Creditor Take My 401k?

Although creditors have been known to claim that they can liquidate everything including the clothes on your back to settle your debts, each state provides guidance on what assets are safe from creditors. These are termed “exempt property.” So what about life insurance and retirement plans? Are they at risk if a creditor takes you [...]

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