Bankruptcy In Florida: When Should I Surrender My Home?
By Carmen Dellutri, Attorney at Law on Oct 29, 2007 in Bankruptcy Practice and Procedure, Benefits of Bankruptcy, Consumer Protection, Florida, General Bankruptcy Information, Surrendering Property
As a Consumer Bankruptcy Attorney in Southwest, Florida, one of the most frequently asked questions in a bankruptcy consultation is: Should I surrender my home now that the value of the home is $50,000, $60,0000, $80,000 less than what I owe on the mortgage(s). This is a great question in a bankruptcy consultation because if you know anything about me and have read any of my previous posts, you will know that I am a firm believer that bankruptcy is all about financial planning for the future.
The truth of the matter is that right now in Southwest Florida many of our residents are sitting on a time-bombs. There are so many ARM’s out there that will not reset for a while. When these mortgages reset, there are going to be many more people asking this very same question: Should I surrender my home? Many times the answer is: Yes, you should surrender your home because you cannot afford it, you have no equity in the home, and you cannot afford the property taxes on the home. These three reasons alone should be enough to convince you that you should surrender the home; however, when you add to the big three the ARM, you have a perfect storm of reasons to surrender the home. However, convincing someone to surrender their homes is not the easiest thing to do. Many people are very attached to their homes, and quite frankly, many individuals could lose quite a bit of money that they originally invested in the property.
Don’t even get me started on Short Sales !!!! That will be my next rant, I mean blog.
But, to get back on track, the reality is that we, in Southwest Florida, are now living in a renter’s market. People are putting up homes for rent for less than their mortgage payments. Our economy is slowing dramatically, and people cannot survive when they are paying to let someone else live in one of their homes for less than what it costs them each month. Which leads us to another problem: What happens if you decide to rent and the landlord collects the rent but doesn’t pay the mortgage? Don’t think it can’t happen. What do you think happens when Landlord Bob collects the rent of $1,200 per month but has a mortgage of $1,600 without the taxes and insurance being escrowed. I will tell you what is going to happen, Landlord Bob will run out of money faster than he cares to believe. Welcome to the housing market of Southwest Florida.
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