Deal Or No Deal

You have put some thought and study into your situation. With a $220/month payment for 10 years on a $66,000 deficiency balance, Bank of America is willing to eat $40,000 in losses, and then 1099 you for the $40,000. Today, under the Mortgage Forgiveness Debt Relief Act of 2007, debt is forgiven when incurred in years 2007 through 2012 under certain circumstances. I think you are right to be somewhat suspicious that the administration in power in 2019 will be as forgiving as the present one, but I don't think that should be your primary concern.

Let's look at your bullet points.

1) Under Pennsylvania law, your wages are exempt from garnishment, but your bank accounts are not. If your creditors are tenacious and seize your bank accounts, your may end up living an entirely cash existence. People do that for various reasons, but it can be inconvenient. Check with an attorney who specializes in bankruptcy law to find how prevalent bank account seizures are in Pennsylvania.

2) You may not have savings now, but if you hope to buy a house in the future and want to take advantage of the miracle of compound interest, then you will either need an account in a Cayman Islands bank or some extra-legal means of saving money in your name in the US.

3) Charge-offs are supposed to disappear after seven years, but collection calls can continue for long after. Bear in mind the annoyance factor of collection calls and letters when tallying the cost of walking away from a debt.

Let's say you take Bank of America's offer. It's a ding on your credit, yes, but it's not as bad as a foreclosure. While you repay Bank of America you can rebuild your FICO score, start saving for a down-payment, and when the Bank of America debt is retired in 10 years you may have enough saved (because your bank accounts were not garnished) and a decent enough credit history that you find a lender willing to sell you a mortgage.

See this article to learn more about your FICO score calculation to see what I mean about the importance of recent credit activity.

Of course, this is your call and you may have other facts to consider. In my opinion, your case for not taking the Bank of America deal isn't as clear-cut as your argument suggests.

I hope this information helps you Find. Learn & Save.

Best,

Bill

www.bills.com/