Why people are defaulting. My theory.

Quote from morganist:

i would disagree. it is actually not that easy to default. when it happens you lose everything. if you have a house they will take it away along with anything else.

the point being people don't chose to default they have no choice. incidentally you do not just drop debt with bankruptcy this is a misconception. the official receiver can take up to sixty percent of your income for three years after insolvency among other things.

people are defaulting because they have little choice. if they are chosing to do it for other reasons they are not informed or unsound thinking.

it has little to do with morality. what little morality they had went when they decided to spend money they did not earn in the first place.
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You have no idea what you’re talking about in regard’s to taking everything

What about these banks fiduciary responsibilities? Misappropriation of funds. Why did banks choose to gamble away money they did not earn in the first place.

Each state has different laws regarding seizure of assets, due to non payment of unsecured debt. Taking ones house may be a blessing for some.
 
I don't think anyone can take your house because of defaulting on unsecured debt. Can they sue you, get a judgement, and put a lien on your house ... yes, but that's a big difference from taking your house.

I had a rental property in Phila that had liens on it for nearly a decade. When it came time to sell the property, I contacted the lienholders, negotiated a settlement with them (for a small % of the lien amount), paid them, and moved on. The liens were unrelated to unsecured debt, but they were just liens.
 
Quote from KINGOFSHORTS:

I think the primary reason people are choosing to walk away from debt is pretty simple. They saw that the financial institute was bailed out with taxpayer money.

People who would never have defaulted are choosing to default primarily because they figure if financial institutes are getting bailed with tax payer money (which is used for bonuses) Then they can bail themselves out by not paying.

They figure the morality of not paying is no longer a problem.

Once you remove the moral hazard of defaulting on your loans that is where the problem is.

And now I think you will see people defaulting and thinking it is okay since they are going to pay more taxes in the future that is going to be used for bonuses etc..

The whole "If its good enough for trump and financial folks, good enough for me as well."
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Talk about over-analyzing a simple situation.....

If you cant pay then you cant pay!

Simple...
 
Exactly...
Quote from Pa(b)st Prime:

This isn't which came first, the chicken or the egg. Delinquencies and then defaults were the cause of banks taking hits.

I agree that walking away has been destigmatized by the bailouts but w/o folks burning the banks first then bailouts wouldn't have been needed.
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Quote from ashatet:

No, we are back to record production of unionized jobs, doctors, nurses, dentists, ball players, movies, more movies, american idols, singers, dancers, execs, sports writers (I mean what kind of society pays a sports writer to live in luxury), personal trainers, self help gurus, financial advisers and the list goes on.

Too bad, we are not producing goods or engineers, or scientists at the same rate that we used to.

In my town, almost every empty building is being taken over by dentists and doctor's office. What the heck is that. Is our main job is to just get health care. I thought our main work was to work and get medical attention if needed so that we can continue to work.
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Not too hard to figure out why this is happening, at least relative to engineering. 'Too few engineers' everybody complains, then when people get the degree and start working, a fake "shortage" is trumpeted loudly every 3-5 years, H1Bs are approved in massive numbers, most engineers experience layoffs multiple times, pay stagnation, unpaid overtime, and maintenance roles involving legacy projects using inferior technology.

The software industry is 'progressing' to the point where the roles are being de-skilled and nerdish methodologies such as Agile/Scrum/XP are employed which removes all professionalism from the role, and engineers are treated as expendable, interchangeable widgets. Skilled engineers are either retiring, enduring painfully, or pursuing more fulfilling careers. Everybody appears to be drinking the outsourcing Kool-Aid and quality appears to be the least important aspect.

The companies that are hiring nowadays seem to be interested in paying about 70% of the going rate, and hiring Indiant/Chinese H1Bs, sometimes outsourcing whole projects. The software quality is shit in most cases when this is done - there seem to be very few people capable of any sort of real architecture skills. The prime skill that is valued these days is mindless compliance with management dictates (yes-men) and basically to give your skills away below market.

Facing this probable future, why would anybody waste their time busting ass for an engineering degree so they can graduate with massive school loan debt and be basically a worthless commodity within 5 years of graduation?
 
You need to find out if the state you live in is a "no-recourse state"

The truth is the threat of a lawsuit or other action from a collection company should pose very little concern. If your state is a no-recourse state.
 
Quote from Rickshaw Man:

You need to find out if the state you live in is a "no-recourse state"
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http://www.loansafe.org/forum/foreclosure-laws/4130-recourse-v-non-recourse-states.html

List of Non-Recourse Mortgage States and Anti-Deficiency Statutes
In a non-recourse mortgage state, borrowers are not held personally liable for more than the home’s value at the time that the loan is repaid. The lender may recoup some of its loss through foreclosure. However, the lender may not sue the borrower for additional funds. If the foreclosure sale does not generate enough money to satisfy the loan, the lender must accept the loss.

Each non-recourse state has its own anti-deficiency statutes that prohibit lenders from seeking judgments. In a few cases, anti-deficiency statues do allow lenders to collect a limited amount of money from the borrower (such as the difference between the debt and the fair market value of the property).
Note that in some states (such as California) non-recourse laws apply only to “purchase money” loans (i.e. original home loans that are used to purchase property). Almost all HELOCs and home equity loans are considered recourse loans and lenders for these loans may sue borrowers to recoup loss. (Except in some cases where the second mortgage lender forces the foreclosure. See: HELOC Foreclosures). There has been some speculation that mortgage refinances do not constitute “purchase money” loans. However, there have been no cases to determine this issue one way or the other.

Anti-Deficiency / Non-Recourse States
Alaska
Arizona
California
Connecticut
Florida
Idaho
Minnesota
North Carolina
North Dakota
Texas
Utah
Washington

One Action States
In some states, lenders are only permitted a single lawsuit to collect mortgage debt. This plays out differently depending on the state’s laws. In New York, for example, a lender must choose between the actions of foreclosing on the property or suing to collect the debt. The following states have some type of one action statute:

California
Idaho
Montana
Nevada
New York
Utah
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The lein will stay there until you die so one way or another they will take your house.

Quote from ralph00:

I don't think anyone can take your house because of defaulting on unsecured debt. Can they sue you, get a judgement, and put a lien on your house ... yes, but that's a big difference from taking your house.

I had a rental property in Phila that had liens on it for nearly a decade. When it came time to sell the property, I contacted the lienholders, negotiated a settlement with them (for a small % of the lien amount), paid them, and moved on. The liens were unrelated to unsecured debt, but they were just liens.
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Just make it obvious that the next generation will have to pay by forcing the descendants of defaulters to pay the debt. We don't need morality, we need consequence.

Most people's success is based on the success of your ancestors, this would just make it more visible. More fair for families that did evolve enough to not take on more than they can handle.
 
Quote from the1:

The lein will stay there until you die so one way or another they will take your house.
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Yes the lien stays until satisfied, but this is hugely different than having your house taken. #1, as years go by, inflation erodes the value of the lien. #2, the lienholder will most likely take a substantial haircut if offered immediate cash.

I'm not saying its a pleasant thing to have a lien placed on property, but it's substantially different than having your house taken.
 
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