Everyone gets scared when they can’t pay a debt. “Am I at risk of going to jail? Will my friends find out? Will the bank sue me and take everything I own? Will they garnish my wages? Will they levy my bank account?” Here is a real life example. She didn’t have the money and stopped paying cold turkey.
I know a person who stopped paying on a bunch of debts. We’ll call her Jill. Jill short sold her house over two and a half years ago. Her loan was with Countrywide, now owned by Bank of America. The owner of the loan was a “sliced and diced” trust.
I’ve called these “zombie debt owners”, because they usually don’t chase you down after a short sale. The owner of the loan lost around $85,000. Long story short, she hasn’t paid a dime on the short sale loss. She got letters and phone calls from Bank of America for about 6 months. After that, the calls stopped.
She hasn’t heard anything from them since then. And she doesn’t expect to hear anything more. The nice thing about the “sliced and diced” loans is there is no single owner. There are probably 10,000 owners of her loan scattered around the world. None of the owners has time to collect from her and Bank of America is too busy with all the other loans on their books.
In addition to the short sale, she stopped paying on five different credit cards with over $15,000 owed. She lost her job and simply did not have the money to pay them. She is still getting phone calls today. Sure, she could get them to stop calling by sending them a letter.
But, they don’t bother her enough to do that. So they just call. As of today, only one of those creditors has file a lawsuit. The funny thing is they filed the lawsuit and then just let it sit there. They didn’t file anything else for another 18 months. As of today, the case is still sitting in limbo. More than likely, it will be dismissed for lack of activity.
Even if the credit card company does get a judgment, they still have to collect on it. The fact is, only 15% of all judgments are ever paid. But, at the rate their lawyers are going on the lawsuit, they probably won’t ever get a judgment.
As you can see, Jill was able to walk away from around $100,000 in debt and will probably never pay them a dime. She could settle with the credit card companies in the future for fifteen cents on the dollar. If so, then it will be because she wants to, not because she is getting forced to do it.
Are you interested in selling your property as a short sale? Call me at (850) 261-4430 for a free consultation. When you call, I will explain how the process works in detail and answer any questions you may have. Discover how other sellers successfully completed a short sale and request a free consultation by calling (850) 261-4430.
Thinking about a loan modification? Our Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Call (850) 261-4430 to request a copy.
Georgia Emmett-Hudleston. Georgia is a Real Estate Professional at Xcellence Realty.
Phone: (850) 261-4430. georgiamyrealtor@bellsouth.net.
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