Milwaukee WI – Here are the recommended steps to take before you strategically default. We have consulted a financial expert who recommends these steps before strategically defaulting.
He believes that taking these steps will reduce the likelihood of your lender pursuing you after a short sale or foreclosure. We have to warn you of what could happen if you take these steps.
If you stop paying your credit cards, car loan, or house payment, then you could lose your house, car, and face lawsuits from your creditors. Your credit rating will also suffer.
In addition, you risk being chased down by your credit cards. All of this is risky and no one knows for sure exactly what will happen. So consult legal counsel before you stop paying anything.
Step #1: Miss a payment or two on an unsecured debt. This can be a credit cards, medical bills, or signature loans. Make sure you get more than 30 days behind on the payment. If it is less than 30 days, then it won’t report to the credit bureaus.
Whether you should completely stop paying the credit cards is another decision. The expert we consulted said you don’t want to be paying your credit cards and not paying your mortgage.
He said it makes it look too obvious that you are strategically defaulting. That is a decision you will have to make on your own. I have a hard time recommending that people stop paying their credit cards cold turkey.
But, going cold turkey is necessary for a successful strategic default. Maybe you can default and settle with the credit cards after the home is sold or foreclosed.
Step #2: Go more than 30 days late on a car payment or your house payment. Then, catch back up on the payments. Remember, the goal is to look just like everyone else who is defaulting because of a loss in income.
Your credit rating will start to decline after these 2 steps. You are right on track. The financial expert said that high credit scores (700 and higher) are probably the biggest indicator lenders use to track strategic defaults.
Your credit score won’t be high anymore. This is the first thing that will make it look like your aren’t strategically defaulting.
Step #3: Go more than 30 days late on your house payment and then catch up again. Most people who experience a loss of income slowly get behind on different payments. They go past 30 days on their mortgage and then catch it back up.
They finally stop paying altogether a few months later. This leads to the next step.
Step #4: Stop paying your mortgage. You will probably want to stop paying all unsecured debts at the same time.
This will make you look as close as possible to a person who is simply having financial problems and is not strategically defaulting. Thinking about a short sale?
