Strategic Default- What would you do
I read and hear a lot of opinions on this subject. The problem I have is that most seem to think they are right in every situation. I have been very fortunate and have been able to pay every debt that I have ever had. I had a business that had a disastrous year. I had assets that could take care of the debt if needed but, I worked my way out in a couple of years. I believe in paying back my obligations.
Now fast forward to today. I have a client/relative that bought a home 2 years ago on an FHA loan. I will call him Dale. Dale worked at a manufacturing plant that supplied parts to the automotive industry. Yes, in Michigan. Two months after buying this home, Dale was laid off. Dale is still laid off and will probably not ever work there again.
Dale is fortunate enough to be a certified diesel mechanic. There are no jobs in this field in his area. In fact there are very few good paying jobs becoming available in his area. We hear from others that Dale could probably get a job in his expertise in another state. But, Dale has an obligation to repay the loan on his home that is guess what? It is under water.
What would you do?
He has a significant other that is still working and he is still getting unemployment. I'm not sure how long the unemployment extensions will continue.
Should he stay put, continue to struggle paying back his debt for years and most likely lose the home to foreclosure in the next 1-2 years? Jobs are not popping up in this area. Unemployment is near 15% here.
Should he walk, if he finds a good paying job some place else, and get on with his life?
What would you do?
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