Los Angeles Bankruptcy Blog

The banks don’t want judges to re-write mortgages, saying it would raise mortgages for everyone.

It kind of goes without saying, but what the heck? Let me just throw this out there: If you need a Los Angeles bankruptcy lawyer / attorney to help you file bankruptcy and give you quality professional help with your credit card debt, foreclosure, wage garnishment or whatever, I can take care of that for you. Just call (888) 54-BK LAW or (818) 908-2018 for the next step.

Inspired by a WSJ article, here are my own pointers on how you can teach your kids to be savvy when it comes to money matters:

Save. It used to be that if you wanted to buy a treat or a car, you dutifully put some money away for months until that happy day came. Now things are financed. This is bad, for obvious reasons. Learn to do without. Learn to sacrifice.

Allowances. I think allowances are good things. That way, if your child wants something, they can put some money aside for it, rather than rely on their good looks with you, or their whining.

Work ethic. If “performance” or attitude for a given week on chores is done poorly, give them half their allowance. It’s important to teach them that there are no free lunches in life, and that the harder they work, the better things are. Teach them to be independent, self-reliant and that half-efforts only hurt themselves.

Extra credit. Allow for opportunities to make extra money, for chores that are once-a-year things, like cleaning out the attic, garage, or raking the five-acre back yard with a hair brush. This way, if they really have their eye on something, there’s a way to show that work ethic, save, and learn self-reliance, all in one.

Attitude. I agree that it’s good to make fun of people who are showy with their wealth, as well as highlighting the tragedy of people who are rich but clearly unhappy (see: B. Spears). The lesson? Money doesn’t buy happiness. It just makes you rich … and unhappy.

Reward saving. This goes in here twice. Make realistic goals about saving that allowance, and then if they reach it, contribute to their savings a minor but not trivial amount.

With effort and consistency, you can teach and shape your children’s behavior towards money that will help them through life, long after you’re gone.

The Wall Street Journal weighs in on the new bill making its way through Congress.

The AP reports that more and more people are doing the “midnight move” and just walking away from their house as the mortgage payment increases and the equity decreases. And most surprisingly, it’s not just the “subprime” borrowers doing it: people with decent credit are also considering this more and more.

That has already led to surging defaults among risky subprime borrowers who could barely afford their mortgage payments even before they got hit with the double whammy of falling home values and rising adjustable-rate loans.

Seemingly creditworthy homeowners are bailing out now, too. They aren’t following the predictable script of the past, which meant stopping payment on credit card and other debt just to keep up their mortgage obligations.

“If you go into a new home purchase with no skin in the game, with just your credit score but no money down, then you really don’t have much to lose from walking away,” said Alex Stenback, a mortgage banker in Minneapolis who writes the blog “Behind the Mortgage.”

There’s even a website to educate people to the process of bailing on their house: www.YouWalkAway.com. Seems like a trend in the making.

Over ten percent (10%) of all mortgages are underwater, according to a new study by Moody’s. This means one in ten houses is worth less than the loans.

Nearly 8.8 million homeowners, or 10.3 percent, are in over their heads, its chief economist, Mark Zandi, estimates.
As a result, millions of U.S. homeowners have the incentive to abandon their properties.

What’s best? A short sale for these underwater mortgages? There’s no easy answer.

Is this really a good idea?

Your mortgage was a bad proposition from Day One. You didn’t read the fine print, and Mr. Sleazeball Lender told you this was a good loan. Nine easy payments of only $800 a month, and then things adjust. What exactly does that mean? Well, you found out, didn’t you? Three months at $2000 a month, and then now it’s at $3600 monthly. When will the mortgage payment go up again, and what will it be then?

Well, of course, you don’t want to move. You can’t refi… it’s too soon, and you have no more equity anyway. And you have some available credit on the credit cards. Just take cash out of the credit card stash and apply that to the mortgages that you can no longer afford. The writing is on the wall, but you don’t want to face reality.

You cannot afford that house.

Only the grace of Countrywide’s HOPE department will let you do a loan modification so that you can afford your dream house turned mansion of nightmares. Sure, they don’t want to own your home and have to sell it some poor shlub for less than it’s worth, but really, do you want to gamble your future on your mortgage servicer being nice to you? Reality is, you’re stuck with a horrible loan, and borrowing from friends, family and even Capital One is just putting off the inevitable.

Robbing Peter to pay Paul is not really fair to Peter. You’re not really going to repay that credit card that’s making the next month’s mortgage while you buy some time. Desperate times calls for desperate measures.

And finally, the credit cards are maxed out. Then what?

You do what you should have done six months ago. It’s time to get ready to move.

But what of the debt?

Just file bankruptcy.

But there may be problems. Can we all agree that if you put a lot of debt on the credit cards and then file bankruptcy that the credit card companies might have a problem with that? Sure they will. They’re not giving out free money. Taking out $3000 and then telling them to pound sand probably will set off some alarms. It’s not Chase or Bank of America’s fault that some shyster lender lied to you about your house’s monthly payment. You borrowed money and they kind of expect it back. Filing bankruptcy will only create new problems, potentially.

In our world, these are called 707(b) and 707(c) motions from the United States Trustee. Words like fraud, bad faith and totality of the circumstances puts your case in the hands of a judge who may or may not see things your way.

We’re very sympathetic to your situation; many people come to our office and we need to help them face difficult truths. But using credit cards to pay mortgages when you know you can afford neither is just not a good idea. And despite the rumors you hear, no bankruptcy attorney, not even this Los Angeles bankruptcy lawyer, can change your mortgage loan. (we can help you catch up on arrearages, however).

It’s a sad situation, and one that breaks my heart. Constant re-finanacing, the downturn in housing prices, being lied to about your loan, losing a job after getting the loans, it all leads to a payment that’s unaffordable. But the good news is: at least I can help you turn the page and start your life over.

Simplify.