Last year I filed and got discharged from ch7. However, my wife was excluded so not all our debts are erased, only those that were solely in my name (there were plenty, so the decision was a good one for us).
Following that, and considering the sharp drop in house prices which has put us severely underwater, to the point where we are under the balance of our first, I've recently made the decision to stop paying our 2nd HELOC. This is not because we can't pay, but because I don't want to, and I believe that the laws as currently written federally and in California essentially leave the lender powerless to do anything. I will certainly offer them something to deal with it once they realize I'm serious, but if they end up charging off and selling to a CA, I'll definitely be able to settle with them.
Nothing new or special here, enough folks are doing the same thing.
However, it has started me thinking. Taking this approach will hit my wife's credit rating and report for the first time (thus far she has been shielded since she was excluded from the BK proceedings). From my experience, there isn't much difference between having one delinquent account and, say, two. The big hit comes from having the first one.
Since her report will reflect that one, it almost seems to make perfect sense to then stop paying her largest credit card too. It has a balance of close to $35K on it. After all, what can the unsecured lender do? sue her? there is nothing for them to go after, we were wiped clean after all.
The system almost seems designed to encourage multiple defaults once you're doing badly, rather than trying your best to keep defaults to a minimum. In other words, it makes more sense to just default on a bunch of stuff at once - whether through BK or not - work through the effects, then proceed to recover as quickly as possible. It seems this is preferable to stretching things out over years, defaulting on one thing, trying to fix it, then defaulting on another, trying to fix that, and so on and so forth, never fully recovering.
The thought is extremely cynical, granted. But the reason I wanted to post is this: say there are other folks thinking this way. In fact, I'm willing to bet there are plenty. What happens if enough of them - us - make the decision to do so? sort of a "consumer credit revolt". Just stop paying all consumer debts, regardless of origin, all at once.
I don't know that I'll really try to seriously talk my wife into it, but it's tempting. I can't really see the downside from our perspective, but I can imagine a pretty significant one at a macro level. What do you think?
Following that, and considering the sharp drop in house prices which has put us severely underwater, to the point where we are under the balance of our first, I've recently made the decision to stop paying our 2nd HELOC. This is not because we can't pay, but because I don't want to, and I believe that the laws as currently written federally and in California essentially leave the lender powerless to do anything. I will certainly offer them something to deal with it once they realize I'm serious, but if they end up charging off and selling to a CA, I'll definitely be able to settle with them.
Nothing new or special here, enough folks are doing the same thing.
However, it has started me thinking. Taking this approach will hit my wife's credit rating and report for the first time (thus far she has been shielded since she was excluded from the BK proceedings). From my experience, there isn't much difference between having one delinquent account and, say, two. The big hit comes from having the first one.
Since her report will reflect that one, it almost seems to make perfect sense to then stop paying her largest credit card too. It has a balance of close to $35K on it. After all, what can the unsecured lender do? sue her? there is nothing for them to go after, we were wiped clean after all.
The system almost seems designed to encourage multiple defaults once you're doing badly, rather than trying your best to keep defaults to a minimum. In other words, it makes more sense to just default on a bunch of stuff at once - whether through BK or not - work through the effects, then proceed to recover as quickly as possible. It seems this is preferable to stretching things out over years, defaulting on one thing, trying to fix it, then defaulting on another, trying to fix that, and so on and so forth, never fully recovering.
The thought is extremely cynical, granted. But the reason I wanted to post is this: say there are other folks thinking this way. In fact, I'm willing to bet there are plenty. What happens if enough of them - us - make the decision to do so? sort of a "consumer credit revolt". Just stop paying all consumer debts, regardless of origin, all at once.
I don't know that I'll really try to seriously talk my wife into it, but it's tempting. I can't really see the downside from our perspective, but I can imagine a pretty significant one at a macro level. What do you think?
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