Jacksonville residents are facing some of the hardest times ever. With 46% of Florida Homes worth less than their mortgages notes, a lot of folks are considering bankruptcy.
As attorneys, it is our job to counsel our clients on what action is in their best interest. I have worked at a few different law firms and I have found that there are three schools of thought. The first thought is that the debtor should always keep the house, regardless of it’s value to debt ratio. This philosophy feels that the American Dream should prevail and that every one of us deserves to own a home. While I don’t disagree that we should all have the opportunity to own a home, this philosophy often fails because the debtor’s income is simply too low to make the house payments. Attorneys who say that they always try to save the house either make so much money that they don’t remember what it’s like to struggle or even worse, they’re just telling clients what they think the clients want to hear. Be wary of attorneys who only tell you what you want to hear. That’s a sign of a good salesman, not of a good counselor.
The next school of thought is that the house should always be surrendered if it’s under-water. This purely economical approach makes more sense than the one toting the “American Dream” and it’s quite attractive. However I don’t think it’s enough to consider only the economics of the situation. Bankruptcy attorneys tend to think numbers, because that’s what we deal in, but a wise person once said something to the effect of, “A home is more than just a house.”
The final school of thought is the one I tend to subscribe to. If a home is under water I consider the individuals complete situation and ask the following questions: Does the debtor have young kids? How long as the debtor lived in the home? To what degree is it underwater? Will the debtor be able to gain the same or better financing on a home later? The list goes on. So, is keeping your home a purely economic decision as the home is just a house? No. Is the ownership of a home an inalienable right guaranteed to every American? No. Whether or not a client is advised to keep an underwater home should depend all the factors involved, be they emotional or economically driven.
If you have an underwater home and aren’t sure what direction to take, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.