I’ve read a number of articles recently about home owner’s strategically walking away from their homes as a result of zero or negative equity (you owe more than the house is worth). For some this decision is very easy, some triggering event (loss of job, reduced overtime, cut in pay, major illness) has made it impossible to pay the mortgage. For others, the decision is often a gut wrenching.

Arizona law professor Brent T. White recently wrote an article Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis addressing this group of homeowners’ dilemma. He writes that many of these families’ decisions arebased on: 1) the desire to avoid the fear and shame of a foreclosure; (2) or exaggerated anxiety over the consequences of a foreclosure. Although he does not pinpoint the real issue (emotion), the article does a good job of analyzing the homeowner who continue to pay on mortgages that exceed the value of the home, compared to businesses or investors who would make an “economic” vs. “emotional” decision.

Regardless of who you ask the decision is a very difficult one. I encounter this question almost weekly in my practice and there is no easy answers. It is also true that guilt, shame and embarrassment are prime motivating factors in staying in a house that has negative equity or one that you can’t afford. The emotions of guilt, shame and embarrassment regarding your finances are often solitary ones that eat away you and your family until it becomes to much to handle on your own.

If this describes your situation, call my office today, and we will discuss your financial situation in detail, including making difficult decisions. My law office offers interpreting in native Spanish and Punjabi for our bankruptcy clients.