More Debt Is Not The Answer
“I was on my way to recovery, then you enabled me.” – Drug Addict
Bailing out banks is like a mother giving her 28-year-old son who is living at home money for heroin, driving him downtown to buy the drugs and then back home so he can use ’safely’.
What does recovery mean to us? We’ve heard it over and over. America is addicted to debt. Experts even say, for our economy to grow, we need more debt. Of course, that is how money works in the first place. There is not a dollar that is created without debt attached to it.
So what’s the answer? Less debt. Also known as de-leveraging. Not more stimulus and bailout paid for by taxpayers… which partly ends up in the bankers bonus check. The answer is also in getting back to freedom. Our country was founded on freedom and we have betrayed ourselves by thinking it’s ok to owe thousands of dollars to other people. This has robbed our freedom and caused us to be so dependent upon working long hours and doing everything to just “get by”. I am sick of just “Getting by”.
Since the government can theoretically spend only what it takes from the people (taxpayers), its increased spending will drive the people to poverty. We are allowing this to happen to our country.
After 2 and a half years of listening to YouWalkAway.com customers and seeing time after time that by defaulting, they feel freedom again, they can afford a normal life again, I am convinced that a strategic default could possibly save our economy…and much quicker than any other solution that I’ve seen thus far. Let’s look at a real life example.
In the WSJ, there is an article titled: American Dream 2: Default, Then Rent
“It’s just a better life. It really is,” says Ms. Richey. Before defaulting on her mortgage, she owed about $230,000 more than the home was worth. People’s increasing willingness to abandon their own piece of America illustrates a paradoxical change wrought by the housing bust: Even as it tarnishes the near-sacred image of home ownership, it might be clearing the way for an economic recovery.
In the WSJ, there is an article titled: Americans Pare Down Debt
“The speed of the adjustment is lightning fast because it’s happening through debt destruction,” said Joseph Carson, director of global economic research at AllianceBernstein in New York. “It puts us closer to the point where the consumer can start making a stronger contribution to recovery.”
I guess I’m not alone in my thinking. In essence, you are taking back the power from the bank by saying I don’t care about my credit score right now, I care about my economic future. You are creating your own stimulus package by following the law and staying in the home until the bank takes it back. There is a breakdown of how it works here.
“A rapid and cost-efficient mark to market”. consider: Snow Job: Strategic Defaults in an Era of Negative Equity
Strategic walkaways employ laws established to protect them from predatory or avaricious lending practices. They create an efficient, rapid, cost-efficient mark to market, stripping away inaccurate and illusory pricing practices that lenders cling to. Solving the mortgage crisis is going to take more than nibbling away at the edges of valuation, tweaking monthly loan payments through interest rate adjustments and loan extensions.
Being protected from crisis may simply be doing nothing more than preventing and delaying a true healthy economic recovery. Strategic defaults are paving the way for true home values, responsible lending practices and allowing for homeowners that once felt trapped…to be free again. - Please comment below -
Jon Maddux, CEO
www.YouWalkAway.com
The private sector is delveraging and this is very healthy, but unfortunately our government is more than filling the void. Our politicians are using the “taxpayer ATM” in the same was that financially inept homeowners use the “homeowner ATM” during the housing bubble. Eventually the bubble will burst and create more problems in our economy.
Thanks John helping individuals make a change in their own lives that also makes our nation stronger.
As a consumer bankruptcy attorney I agree with this approach wholeheartedly, in principle. In practice, one cannot ignore the distinct possibility of a deficiency judgment for the difference between the liens and what the foreclosed house sells for at auction.
These deficiency judgments are real and I see them push people into bankruptcy. It’s a fact that cannot be ignored when pushing the Walk Away approach. Basically, in a deficiency judgment jurisdiction you are choosing bankruptcy when you walk away. People deserve all the facts when deciding what is the best choice for them.
Your Strategic Default Has the Same Effect as My “Social Pardon.”
Let Every Joe the Plumber’s Household Declare “Social Bankruptcy”: $20,000 grant.
http://activerain.com/blogsview/747857/let-every-joe-the-plumber-s-household-declare-social-bankruptcy-20-000-grant-
Gailyn, good point and information that should be shared and considered before deciding to walk away. I will point out that you do take it a bit too far. Even in the event of a deficiency judgment one can still avoid bankruptcy. In the case of a large deficiency most banks are not seeing dollar #1 of that judgment and will often sell it, where legal, to a collection agency for pennies on the dollar. A debtor with a few dollars and a willingness to negotiate can often settle with the bank in advance for pennies on the dollar as well. Even in the event you are too late and the bank has sold the judgment you can make the same arrangement with the collection agency for a few more pennies on the dollar then they paid.