According to a recent analysis made by Trans-Union, one of the big 3 credit reporting agencies, the analysis showed 30.4 percent of subprime households were behind on their mortgage payments but current on their credit card payments. Only 12.3 percent of consumers were late on their credit card payments but up to date on their home loans.
Why would homeowners be more concerned with paying their credit card debt than ensuring they have a place to live? Strangely enough, a significant number of Americans are willing to lose their houses but save their possessions.
Traditionally, home loans have been paid first, but with the current housing crisis many families owe more than their home is worth and seem less willing to sink more money into their devalued home. It has become easier for homeowners to rationalize defaulting on their mortgage, especially if the mortgage payment is eating up a large percentage of their income. If the homeowner has little equity in their home they may not lose much if they give up their home.
Foreclosure notices may flood the homeowner’s mail box after a few missed payments, but a foreclosure may stretch over months or years. Homeowners may take advantage of this time to catch up on other types of debt payments. Credit cards can often help satisfy the immediate demands for food and utilities, so it makes sense most consumers, who are financially strapped, will try to keep the credit card balances paid.
What was not reflected in the Trans-Union analysis is the relationship between those who are willing to give up on their mortgage responsibilities and bankruptcy. Foreclosures, although they can be legally drawn out, are inevitable. There will be a time, if you have defaulted on your mortgage, when you will be evicted from your home.
The mortgage companies do not forgive the deficiencies when they unload the foreclosed home. Depending on your state, the mortgage company or debt collection agency might have the legal authority to collect the deficiency judgment. If successful, they could garnish your wages.
Filing for bankruptcy protection may protect homeowners from wage garnishments and home foreclosures. If you are facing a home foreclosure, or uncertain creditor action and you need relief from the stress of debt, contact a bankruptcy lawyer. We can help debtors and homeowners who live in and around the metropolitan area of Detroit, Michigan. Contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who can answer your bankruptcy questions.
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