While the country is sitting smack dab in the middle of a long term recession and while you may personally be experiencing foreclosure, job loss and other economic pain, it may be difficult to focus on the bright side and the potentially life changing up side to this short term financial crunch. I’m here to tell you that there is a potential bright side to all this turmoil that could dramatically affect your quality of life forever.
Over the last several years, we were all living far beyond our means. We were accumulating far too many things and were spending way too much money as a percentage of income. Cars were always new, houses were bigger and constantly being upgraded and we were constantly treating ourselves to way too many luxuries. Because income growth didn’t increase over this period to pay for the dramatic increase in spending, all this spending was financed with debt. Borrowing and use of all types of credit surged, but the largest source of funding for the out of control spending orgy Americans engaged in was refinancing their homes.
The sales pitches from mortgage brokers and lenders was compelling, ” consolidate your high interest credit cards into one manageable payment”. The moment those high interest credit cards were paid off, the credit card backed spending started all over again (no need to worry though, we’ll just refinance this new round of debt away). Now the music in this massive game of refinancing musical chairs has stopped and Americans find themselves stuck in a home burdened with far too much debt relative to the value of the home.
The end result for many homeowners will be foreclosure and for some bankruptcy. Where’s the silver lining and what is the potential good news? The reality is that most lenders are either unable or unwilling to aggressively pursue foreclosure cases against homeowners. If a foreclosure case is properly responded to by an experienced foreclosure defense attorney a homeowner can find themselves living in a home for a year or more after the case is filed.
While there are a significant number of long term negative consequences from foreclosure, most homeowners are relieved to find out they can be walk away from their mortgage obligations and get out from under the massive debt they’ve been laboring to pay for years. The end result will be a far more enjoyable life uncomplicated by the stress and anxiety caused by trying to pay the debt service on a lifestyle that was unrealistic from the outset.