Updated !!!! Walking from house

PhillyGal34

I'm curious and thought you ladies could help. Some of dh's distant family members have done something that to me is shocking (and insanely irresponsible). The husband was laid off and the wife was a stay at home. They were one payment ahead on their mortgage but decided they wanted to move south to live near the water. So they simply walked away from their house. They sold their big stuff and bought a much cheaper house in Florida in cash. They have since bought a new car and a time share and have taken several vacations and to to Disney frequently, added a pool to the house and bought all new furniture and appliances.

So here is my question. When will the house thing catch up to them? It's been over a year and what happens when it does? I say the bank will go after their new property and kill their credit but mil seems to think nothing will happen! I should also mention they walked because they had a second mortgage on the house for improvements and owed almost double the value of the house. They were ahead on payments so the bank wouldn't even work with them but they did have some major credit card debt.

So what happens??

Eta- I wanted to add that I know there are times that houses are so underwater that there's no option than this but I think the way they are spending money is irresponsible. Husband was a contract employee but is out of work again and wife is still at home.

Erikan73

It will catch up with them all their spending. Chances are they are living beyond their means. The bank may already be on them and you aren't aware of it. Chances are they are already getting letters and phone calls. If they ignore the situation, it probably won't be long before they get a letter to appear in court for the money owed. The damage that all of this is doing to their credit, will take years to repair.

PhillyGal34

Thanks. I'm really just being nosy because it really irks me that people are irresponsible like this and seem to get away with it.  Again, I know there are situations with the housing market and things that were beyond people's control. I do not fault people for that but this family is completely irresponsible.  New cars all the time, huge vacations, etc that we would never do because we are responsible and live within our means... but they constantly throw it in our faces and while I do not want to see them living on the streets I don't want to see them get away with it scott free either!

MommyLiberty5013

Yeah it's frustrating. I know that the banks were to blame for a lot of the housing crisis, but the irresponsible home owners (like these people) had a huge hand in it too.

 

This will damage their credit for years. Plus, what they are doing is actually stealing. They bought a house (from the bank) and have not yet paid for it. And, they didn't truly go into hardship and they didn't work with the bank to make a repayment plan (as far as we know). I will be surprised if this does not come back to get them, but banks are backed up with processing this type of crap, so it may be awhile.

 

short+sassy

Funny enough, the former owner of my house did this exact same thing.  Between an SBA loan, second mortgage, home equity line, and I think a few other loans with the house as collateral...they owed about 3x what the house was worth when it was foreclosed on.  They basically bought another house with cash, stopped paying all the loans, and I think even rented part of the house out to his brother for a nice year or so during the "foreclosure process" before the bank locked the doors.

Technically, a bank can absolutely sue and go after people who default on their mortgages for any shortfalls incurred after the house is resold.  But, realistically, this is rarely done.  Yes, their credit will be ruined for years

hoffse

That's.... appalling.

I understand how frustrating it must be for these people to throw their "wealth" and lifestyle in your face.  I'm glad you know it's all a farce.

Yep once the bank catches up with them their credit will be in the toilet for years to come.  Like PP said there will probably be a court summons, etc. that they will just miss because they won't be there. 

At the end of the day, you and your family are 1000% better off than these people when you live within  your means.  That fantasy bubble they are living in will pop sooner rather than later, and then it's going to be a hole they may never recover from.

vlagrl29

Is the husband dealing drugs on the side?  I kid  It's really the only way I think they could afford the lifestyle with their current status.

PhillyGal34

vlagrl29 said:

Is the husband dealing drugs on the side?  I kid  It's really the only way I think they could afford the lifestyle with their current status.

Credit.... I'm assuming at crazy high rates. I just cannot believe that companies continue to sell to them!!

I definitely know I'm better off in my small house and old car haha but it still stinks when they rub it in. I have the feeling bankruptcy isn't too far off so they can just "start over" such an awesome example for their kids!

Thanks ladies! I guess only time will tell!!

brij2006

This could be a long shot, but have you ever thought that maybe they're doing all of this and buying all of these things because they plan to file bankruptcy in the near future?

MrsD06

brij2006 said:

This could be a long shot, but have you ever thought that maybe they're doing all of this and buying all of these things because they plan to file bankruptcy in the near future?

I know someone who did exactly that. They remodeled their kitchen, did landscaping, bought a new car, etc then stopped using their cards for 6 months in order to file. All their debt (approx 70-80 thousand that I'm aware of) was discharged about a month ago.

MommyLiberty5013

MrsD06 said:

This could be a long shot, but have you ever thought that maybe they're doing all of this and buying all of these things because they plan to file bankruptcy in the near future?

I know someone who did exactly that. They remodeled their kitchen, did landscaping, bought a new car, etc then stopped using their cards for 6 months in order to file. All their debt (approx 70-80 thousand that I'm aware of) was discharged about a month ago.

Long long ago, there used to be a special place for people like this. It was called Debtors' Prison...you didn't pay your debts, you went to jail. Personally, I think this is fine. Walking away from debts like that is stealing.

The banks lose the money, and, in turn to cover their financial losses, they have to charge higher fees to their other, rule-abiding customers. So next time you have a $50 overdraft fee instead of $30 you can thank your neighbor who ran out on the bank!

MrsD06

MommyLiberty5013 said:

MrsD06 said:

brij2006 said:

This could be a long shot, but have you ever thought that maybe they're doing all of this and buying all of these things because they plan to file bankruptcy in the near future?

I know someone who did exactly that. They remodeled their kitchen, did landscaping, bought a new car, etc then stopped using their cards for 6 months in order to file. All their debt (approx 70-80 thousand that I'm aware of) was discharged about a month ago.

Long long ago, there used to be a special place for people like this. It was called Debtors' Prison...you didn't pay your debts, you went to jail. Personally, I think this is fine. Walking away from debts like that is stealing.

The banks lose the money, and, in turn to cover their financial losses, they have to charge higher fees to their other, rule-abiding customers. So next time you have a $50 overdraft fee instead of $30 you can thank your neighbor who ran out on the bank!

I whole heartedly agree! It's really unfortunate for people who do abide by the rules and have a good moral compass.

MrsD06

I whole heartedly agree! It's really unfortunate for people who do abide by the rules and have a good moral compass.

vlagrl29

MrsD06 said:

I whole heartedly agree! It's really unfortunate for people who do abide by the rules and have a good moral compass.

yes but at least we can sleep at night knowing we aren't trying to scam people.  karma does come back around.

PhillyGal34

vlagrl29 said:

MrsD06 said:

I whole heartedly agree! It's really unfortunate for people who do abide by the rules and have a good moral compass.

yes but at least we can sleep at night knowing we aren't trying to scam people.  karma does come back around.


So true. And knowing that I'm being a good example for my son helps too.


Thanks guys. Now we just wait for the bank to catch up and see what happens.

PhillyGal34

Update!!! They just had their anniversary and get this .... She took him to Mexico and he bought her a brand new SUV!!! They amaze me!

vlagrl29

PhillyGal34 said:

Update!!! They just had their anniversary and get this .... She took him to Mexico and he bought her a brand new SUV!!! They amaze me!

Some people must not have a conscious.  Even if we had the money to do that we would never buy a car brand new or go to mexico....we would go to hawaii

MrsD06

Holy moly! They must have really high credit card limits or something.

PhillyGal34

They must. Neither of them are working right now! Unless he got a job in the past week that they haven't mentioned.

It seriously blows my mind.

HoneyBee973

People cover up a lot of things with big expensive material things and vacations.  Eventually the trust comes out.  Have the popcorn ready, and watch 'the show'

brij2006

Wow. I agree with @honeybee973 These things will catch up to them.  Be prepared to watch the fireworks explode.

hoffse

Yep.  They might also be spending down cash so that they be all, "oh look, we can't afford to pay for our house!"

Still - what they are doing is basically fraudulent, and it will absolutely come back and bite them in the ass hard once this catches up with them.

PhillyGal34

today's gift?? a pre-vacation vacation to a resort a few hours from their house! Apparently anniversaries are not a one day occasion???

hoffse

Oh good God.

So do they call you and tell you whenever they do stuff like this?  Do they post it on facebook?  Because if it's the latter, I would be so tempted to send their bank an anonymous tip to check out their facebook posts lol...

vlagrl29

karma will come soon enough

PhillyGal34

hoffse said:

Oh good God.

So do they call you and tell you whenever they do stuff like this?  Do they post it on facebook?  Because if it's the latter, I would be so tempted to send their bank an anonymous tip to check out their facebook posts lol...

It's every day on facebook. They have been posting things for so long saying "happy anniversary sweetie" that people are starting to post "when is your anniversary because you've been saying that for over a week!" 

If I didn't think it would somehow get back to me I would... but it's not worth risking my entire relationship with my husband's family over.  Karma will get them eventually but in the meanwhile I'll sit here and watch in awe of their fraud.  

vlagrl29

sounds like they are attention whores

hoffse

See, I'm envisioning something like this happening to them:

http://www.consumertaxreviews.org/alerts/the-queen-of-irs-tax-fraud-busted-stands-trial/

Not saying you should alert the authorities - but man it would be tempting!  I can't believe they put stuff like that out on the internet.

PhillyGal34

oh my... I should post that with "I cannot believe the things people do and think they can get away with" or something haha 

Wulfgar

I knew people that did this, my ex-wife's sister's family was really good at doing this.  They would keep very little cash in banks and run up credit cards then file for bankruptcy every 7 to 8 years.  They would transfer title to their cars to their children so that they can keep them (the sister was 20 years older then my ex-wife and her older children were older then my ex-wife).