Is it ever worth intentionally defaulting on a mortgage?

[threaded]

Selling at an auction "cheap" is considered market value.

Lots of people in the last recession got caught out with banks chasing them after handing in the keys thinking that was the end of it.

IIRC many people thought that the "mortgage insurance" they'd been sold did that for them. Fools! They'd actually been paying the banks insurance to chase them if they defaulted.

[MPwannadecentincome]

Not strictly true. They have a responsibility to get market value for it - they can't just sell it on for a quid and say you owe them £499999.

IIRC, how they decide that market value is up to them though - but it must be reasonable and documented.

Selling at an auction "cheap" is considered market value.

Lots of people in the last recession got caught out with banks chasing them after handing in the keys thinking that was the end of it.

[rootsnall]

Don't even think about it as an option.

If you really do owe a packet and have no equity then I reckon it is an option but you must make sure you go bankrupt when doing it. It'll take a good 6 months to kick you out and in that time you've got to stash as much cash away as possible. It helps if you are in a line of business were you can get paid in cash. The mistake people made in the last housing slump was not going bankrupt.

[threaded]

As it so happens, most mortgage defaults are deliberate, and they could pay if they wanted. Think ex-husband, wife gets house, that kind of thing.

[Zippy]

What about an unsecured debt like a credit card? I was thinking of loading one up to the max and then claiming poverty, they must be inundated with defaulters at the moment so I may get lucky and get it written off.

Don't do it if you own anything of value (like a decent car or a house). The cc companies have been making people bankrupt to get their hands on these assets.

[DimPrawn]

What about an unsecured debt like a credit card? I was thinking of loading one up to the max and then claiming poverty, they must be inundated with defaulters at the moment so I may get lucky and get it written off.

They can convert the unsecured debt to secured debt.

http://www.dailymail.co.uk/money/art...cost-home.html

[gingerjedi]

What about an unsecured debt like a credit card? I was thinking of loading one up to the max and then claiming poverty, they must be inundated with defaulters at the moment so I may get lucky and get it written off.

[Spacecadet]

Not strictly true. They have a responsibility to get market value for it - they can't just sell it on for a quid and say you owe them £499999.

IIRC, how they decide that market value is up to them though - but it must be reasonable and documented.

Any offer they accept has to be published in a local rag and IIRC 2 weeks must be allowed to pass to allow for any higher offers to be made

[DimPrawn]

The bank or building soc will sell your house, probably at auction.

In all likelyhood the price they receive at auction after all fees will be significantly less than what you borrowed.

They will sell the difference (the debt) to a large debt collection agency to recoup most of the money and that will be the end of it as far as the lender is concerned.

The large debt collection agency will most likely sell the debt to a smaller, much meaner agency. You know the ones, the ones where the collectors look like something like Vinny Jones' meaner brother.

These people will hound you for all your life is worth.

Don't even think about it as an option.

[Moscow Mule]

here, they can sell it for whatever they want and chase you for the remainder.

Not strictly true. They have a responsibility to get market value for it - they can't just sell it on for a quid and say you owe them £499999.

IIRC, how they decide that market value is up to them though - but it must be reasonable and documented.

[sasguru]

In the US, they can only take the house and nothing else.

here, they can sell it for whatever they want and chase you for the remainder.

[Zippy]

They come after you for the difference between the sale price of the house and the debt.

[DiscoStu]

I was thinking about this, if you can't be bothered to sell your house or it won't sell, what happens if you just stop paying the mortgage? Will the lender come after you for payments forever, or will they eventually repossess the house and draw a line under it? When they repossess, what happens if the house is worth more or less than the outstanding debt?

Cue self-righteous brigade chanting 'pay your debts'... but this is a theoretical question only.

If it's worth less than the mortgage when it's repossesed and sold then they'll be wanting the difference from you.

[d000hg]

I was thinking about this, if you can't be bothered to sell your house or it won't sell, what happens if you just stop paying the mortgage? Will the lender come after you for payments forever, or will they eventually repossess the house and draw a line under it? When they repossess, what happens if the house is worth more or less than the outstanding debt?

Cue self-righteous brigade chanting 'pay your debts'... but this is a theoretical question only.