How to do a strategic default
I thought I'd talk about strategic defaults and how you can settle cards and settle with your home lender.
Here is a note that is typical of what I get all the time every day.
Greetings Richard,
I've been praying about what to do with my finances for a long time now… I guess I just wasn't ready to get the concepts you've mentioned in your material.
Anyhow, about a year ago I was approached by a credit consumer company to help me settle my debt and almost went with them, but didn't feel write about it. I wanted to hear more opinions first.
I finally got serious about doing something about my debt when Citibank increased my APR to 29.99% out of the clear blue. I contacted them and there was nothing they could do they said. I've had excellent credit and always pay my minimum balances on time for years with them.
I have slightly over $30,000 in credit card debt from starting a business I didn't follow thru with and some personal development seminars I attended… probably some other frivolous items, too.
Anyway, I'm experiencing sooo much inner relief thinking of what it will be like to be out from under this debt that I thought I'd have to work towards and maybe eliminate in 8 years. Thanks for making the youtube clips. I've got more to learn and so I'll be digging in.
All the best,
"Laurie"
My answer to this is to think strategic default.
What is a strategic default? Two things:
1. Your FICO ends up okay. It may be bad for a bit but it comes back, and
2. Your liability FALLS to a manageable amount. Not your monthly, but your TOTAL AMOUNT YOU OWE is
something you can handle given your finances.
3. The timeframe is not years, but MONTHS.
I want to hear what you have to say, your situation. I will try to answer as many as I can.
Go here and post your situation.
- I want to start a dialog with you on strategic defaults.
- Settling cards, settling mortgage loans.
- Principal reductions.
This is going to be the next BIG thing if it isn't already.
Go ahead and post your situation here. Your email and name will not show up to the world. I'll try to answer as many of these as possible and we can talk about it in my daily email. Change the facts around if you want, just for privacy.
Thanks!
P.S. Post now while it's fresh. Let's get some great dialog going. Thanks!
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Comments on How to do a strategic default »
I have several properties under water. I can make payments on these properties but at the age that my husband & I are it does not seem to make sense. 55 & 60. How can I get principal reductions?
Hi Wendy, thanks for your comment.
Principal reductions are possible often through the bank's legal department. Not the "loss mitigation" peeps. Those peeps have their standard track to run on. We've seen how far that gets us.
The legal department has authority to reduce principal, often to 90% of the current appraised value. They don't care what your credit is, just that you have enough income to make the payments but there are no guidelines and stupid rules.
You need grounds to go there and this means you have to be willing to press hard on the legal button: loan was wrongfully made, violated RESPA, violated TILA, violated state laws…
Hope this helps a little.
warmly
–Richard
i would i know if my loan was wrongfully made??? i just got a loan after putting down 85000 on a house that was 275000…i now feel i made a really bad choice…i don't want to just walk away from the loan an i don't want to refi an take the money an run! i would like to get my loan reduced somehow…what should i do…i live in r.i, i'm married an my wifes name is on the loan also
There are red flags for a loan that was wrongfully made. Loans made through brokers, loans rushed through, documents with blanks in them that are not filled in…
warmly
–Richard
I purchased Dime on the Dollar. Also did my own loan mod. What about Cacellation of Debt (1099C) for principal reduction and strategic default (foreclosure) of rental properties? Any way to avoid recapture of depreciation (sched. E) Most mortgage companies have failed to file but my accnt. says we have to mention it anyway because schedule Es have already been filed on foreclosed homes.
Dayna
Make sure your accountant really researches this. Find an aggressive accountant if you have to. Non-recourse loans don't count on cancellation of debt income, nor does the extent to which you are technically insolvent. Many accountants are not up on the rules. Yours might be but many are not.
warmly
–Richard
Thanks for your encouragement we hung in there and did a short sale on our first and got the second to accept $8,500 of $66K owed. The 1st chipped in $6.5K and we put in $2k and the wrote it off as a charge off.
Now we have $250,000 of credit card debt with 6 cards. They are hitting us hard and calling some 10 times per day. Even when I speak with them daily they still call. I am wanting to do a settlement with each and aim for the 10% and I have told them what Wells Fargo did, but they aren't listening. I guess we are about 2 months late on most. One of them proposed a no interest (went down from 22%) of 3 years on one of the smaller loans. My wife is frutstrated with the calls and I have told them of our financial situation and not to call, but they still do.
Also have 2 residences (actually one is mine and one my wife's) and are behind on those mortgages but have not qualified for loan mod. due to excessive debt. So when we make those payments there is no money left over for the credit cards. Want to do the right thing but also want to settle the credit cards as low as possible. But dont really want to get sued either.
More than likely, regarding the credit cards, you aren't late enough. Serious negotiating gets done around month 5-6 after date of first delinquncy. I am really pleased you are working on this rather than just letting it continue.
Just get a screening device for your phone so you don't have to answer the phone. Get a second line, and give it to your friends. Return calls once a month to each lender so they know you aren't avoiding them. Many of my students say "I am still considering bankruptcy, seeing what I can do to avoid it, trying to raise cash. No money to pay anything and I'll be back in touch," and they leave it at that.
You could get sued of course. It is always a possibility. Most banks won't sue most of the time. Even if they do, it is still quite possible to negotiate just the same as if they hadn't sued.
warmly
–Richard
Almost in the same situation with Joel above, what is the best course you have to get the comprehensive answers to solve the problem?
Thanks.
Hi Richard!
I completed a forebearance form in March of 2009. After two months of calling my mortgage company (Suntrust), I was told I would not be able to receive a forbearance because Wells Fargo owned my loan. HUH! I was never told this. My loan is also "no doc".I purchased your modification program in mid 2009. My mortgage company said they never received my modification packet, even though I have proof of faxing it over 4 times on different dates . Anyway, I filed in bankruptcy in December and I currently have an automatic stay under ch 7/13. My lender wants relief from the automatic stay so they filed the Notice of Motion for Relief document. I have been trying to work something out with them FOREVER! Can you tell me what a good response might be to the judge so that they do not lift my automatic stay. I just want more time to work out something.
Hi Richard I have been trying to get a loan mod with chase for a year now and nothing Now im behind 4 months an fha loan fixed 30 years I DONT GET ANY OF MY statements and no threatning calls and my state has a mediation program does mediation help? Should I get legal councel or do it myself.I just want to keep my home and save some money and not get the runaround
Hi Richard
I bought several of your dimes on the dollar tapes and am a member of your free and clear club and started dissing my credit cards 2 months ago. It has all happened as you said it would the calls, the letters, ect and I have not communicated with them at all. I changed my phone number as well-didn't know if that was the right thing to do but I did anyway. I have to say, it doesn't hurt a bit and i am actually saving money –over $1000 per month! I used to be terrified of credit card companies but now that you opened my eyes, I don't even feel guilty and I am even enjoying it. As far as my credit being in the crapper-I don't care about that either! This is funny: The cc companies are STILL sending me invitations to open up more credit. Which makes me think their right hand doesn't know what their left hand is doing. Thanks so much for the best advice i have ever gotten in my life! You are my Hero!
Fondly,
dee
Like some of the comments above, I am in the same situation. I have creditors calling 10-15 times a day, but I have been ignoring the calls. I am probably about in my 3rd of 4th month late on most of them and the thought is just sickening to me. About 4 months ago…I had excellent credit. Tenants stops paying and I could no longer foot the bills or the mortgage payments. What do I do? I hate these calls and as someone stated earlier, they still call even if you talk to them, trying to get blood out of turnip.
I am tossing between Bk and Debt Settlement…Don't know what to do at this point. How do you get an audit of loan documents? How do you determine if loan wsa done incorrectly? Thanks I have your programs.