Thursday, May 6, 2010

Do you have the bravery to NOT pay a debt?

For a blog about getting out of debt, that is an interesting thought....

Many homeowners have found themselves in a situation of trying to refinance their primary mortgage.  We are no exception.  The rates have dropped over the past months, and at under 5%, it is looking like a good time.
Sallie Mae and Freddie Mac both have programs to help homeowners with their "home affordable" program.  Of course....our mortgage isn't owned by them.

You can do a conventional refinance.  30 year fixed, no points, blah blah blah.

Unless you are like us, where we don't have equity in our home because we stupidly pulled it out during our last refinance.  And then the house value dropped.  And now the loan to value ratio is too high to get a conventional mortgage.

The bottom line is we would have to bring a considerable amount of cash to the closing table in order to do this, and that just isn't an option.

When I spoke to the mortgage specialist, I pleaded our case.  We ALWAYS pay our mortgage on time, in full.  Isn't there something they can do for a good customer.  No....unless you were 90 or more days behind....they can't help you.

Ok, seriously....are they suggesting you NOT pay?  You have to be in arrears for over 3 months before they will even think to talk to.  There is no way I could do this.  I would be sick to my stomach.  To intentionally not pay the bill seems insane to me! 

Heck...I am having a hard time waiting until the end of May to pay Hospital bill #1.  I plan on making a bulk payment, and this is one of the few bills I have that I still have to write a paper check for.  If I pay it now with the funds I have, it will throw them off if I make another payment.  So I am sitting here waiting to do it.

And THAT is giving me problems!

Could you do it....intentionally not pay a bill in order to get help once you were behind?


  1. DO NOT DO IT!!!!! It is a stupid idea!!!!!

    My husband and I LOST our house because of this same idea! My DH was threatened with a lay-off. Was told his company was laying off 30-40% of their workforce! So, to be pro-active, we skipped a payment, called about a modification and got SCREWED! Our lender screwed up the process so badly that they ended up foreclosing on us! To make a long story short, the lender didn't know up from down. The loss mitigation department (who does modifications) didn't communicate with the servicing department and therefore, the servicing dept. wouldn't take our payments as they hadn't received a release from the loss mitigation department indicating that our modification was done... so... we ended up 3 months past due because the lender wouldn't take our payments. At that time, since in their records, they'd already worked with us on a modification, they fast tracked it to foreclosure. We ended up hiring an attorney, trying to short sale the house (lender wouldn't except a short sale) and finally being told by the president of lending that they had no intention of doing anything but foreclosing! They made the most money that way. They got the loan paid in full by a buyer, got to write off the whole note as bad debt and got a kickback from the government because of the foreclosure!

    I thought I was being pro-active! These guys are NOT out to HELP you. They are out to make as much money off of you as they can!!! You will not be getting help. You will ruin your credit - guaranteeing all your open credit lines will raise your rates, or close your accounts (as ours did!) Because in the credit world, 90 days past due is still considered the foreclosure category... even if they work it out. Chances are, your lender won't approve your modification and then you've got to quickly come up with 3 months past due payments + all the extra interest and late fees they tack on to it. Our 3 months past due issue couldn't be resolved because, while we had the house payment $, we didn't have the additional $1200 in late fees, extra interest to bring the note current!!! Ironically, in the end, my DH never lost his job!

    If you are feeling that things are that tight, then find a reputable Consumer Credit Counseling agency who will negotiate interest rates for you - dropped ours from 29% down to about 8% on average. I pay them one lump sum + extra every month and we'll be debt free in August! CCCS will require you to close all credit lines that you want them to work with... so you can keep one or 2 out if you need to, but, I don't recommend it. I don't use anything but a debit card and cold hard cash and life is so much better, saner, less stressful. If I don't have it, I don't buy it!

    Best wishes!!!!

  2. Thank you for sharing your story, which totally outlines why this is such a bad idea. Oh trust me, I have no plans on doing this. I was just curious if others had.

    We can make our mortgage payment, and even though our interest rate is 7.5%, it is better than having a train wreck happen, such as what happened to your family.

  3. Just wanted to say I don't think you are alone. I just talked to someone else that said they haven't missed a payment YET and that their mortgage company would not work with them until they were behind in their payments. What??? What in the world is happening in this country?

    Also, I know others too that took out home equity loans when home prices were high. Some people actually took that money and invested it in the stock market thinking their investment would return more than the interest they were paying on their loan. Now, the house is gone and they are bankrupt (and divorced, but that was for different reasons. :) )

    I like that you are very dedicated to getting out of your situation. Too bad you don't have a mortgage company that was interested in doing the logical thing. Good luck and I will be checking in to see how you are doing!

  4. I would never not pay a bill. Well of course unless I totally and honestly could not. But even then I would try and just get by with minimum payments until times got better. I would be sick to my stomach too.
    Husband just told me about some one he knows that is walking away from their house...just too expensive for them to afford. Times are very sad.

  5. I don't think I would be able to do it!! I am on a debt management plan though and I did have to stop paying my bills to get the plan rolling but it was all under guidance of UK government approved debt help so it was easier.

    :( I hope it gets fixed for you.