Then you start getting rid of things you cant afford to keep, like the home with the large mortgage, the two cars and so on.
You then go on welfare for a period of time untill you find a job
It's not that simple to abandon your life and debt. . . if it was then even *more* people would be doing it.
You can't sell your house back to the bank if you can't afford it - if you can't afford your current standard of living you have limited choices and each option has dire consequences that don't jsut affect you and your family - they effect the home and auto market/the government and everyone else.
1) Bankruptcy - if you still owe on loans (auto, school), credit cards, medical expenses:
.....by filing for bankruptcy you have 2 options - Chapter 7 and Chapter 13.
Chapter 7: your assets are liquidated (sold off) to repay what you can't pay out of pocket.
Chapter 13: your debt is consolidated and you pay a lump sum each month to cover that- it's like a government-ok'd debt consolidation loan but with more strings attached and a longer bad after-effect.
Problem 1) Your credit will plummet. Without credit you're far less likely to qualify for a new loan and so on - even some job opportunities will be shut off from you.
Problem 2) If your credit doesn't take a swan dive you, still, might be barred for quite a long time from drawing out a new loan for a vehicle, home, even schooling. . . bankruptcy seems to solve a few issues but it causes many others.
What will benefit your family more - filing for bankruptcy because the job market is **** and letting go of your only assets in life - or staying on unemployment benefits and bringing some sort of income - yet still altering your life (letting go of cable, etc)?
2) Foreclosure (home/business) and repossession (auto/all other items)- this is when you just stop paying and let the bank take what you have - like an unfiled Chapter 7 bankruptcy. They take it - you no longer own it - and when they resell it that makes up for your debt-ducking.
Problem 1) Same thing with bankruptcy - credit plummets - but a foreclosure stays on your record FAR longer than a bankruptcy.
Problem 2) Same thing with bankruptcy - if your credit doesn't somehow plummet you will still more than likely be denied for a new loan for an auto/home. . . While a new home might not be smart or a necessity - there's nothing illegal about being turned down from an apartment, duplex or home rental if you have bad credit. . . I've been turned away from renting an apartment due to bad credit in the past. . . and it takes time *and money* to fix bad credit.
Problem 3) The Housing market, due to foreclosures, fell over on itself - the banks don't want to own your home and once they do own your home they have no one to get rid of it to - no one's buying.
3) Selling off your own assets.
Problem 1) You can't just drive your car to the dealer and say "here, buy it back!" - you have to find a buyer for a vehicle that you still owe on. . . which is harder in a market where people have *less* money to go around.
Extension to this - you can trade your vehicle in at a dealership - but your remaining balance on your current loan is just rolled into your new loan for a new vehicle which definitely won't save you money . . . so your better bet is to just keep it until it's paid off.
Problem 2) Same thing with a home - you have to be able to sell it off, which takes a lot of time - if you don't have money and your unemployment benefits are running dry - how much time do you have?
Problem 3) The housing market has failed and has yet to regain itself - someone's home bought 5 years ago for 90,000 or 200,000 is worth LESS than that, now - by selling - they lose money and might even still OWE on the home.
The problem, right now, isn't *just* that people have lost jobs and some are lazy and not even looking for work. The problem is that there is no work - and all options are ****ty with long-lasting negative effects.
If it's not someone's personal *fault* that they no longer are gainfully employed then they shouldn't have to make their entire family SUFFER by giving up all that they know, own and did work hard for.
