In today's society, when is it time to just say no? As the baby boomers are now retiring, they have lived their entire lives giving their children everything that their parents wouldn't give them. Their kids have now grown up and have no idea of what a recession or depression is. Economically speaking, this generation has grown up seeing the largest economic growth of any country in the history of the world. They don't understand what a downturn in the economy means. I have spoken with many young people prior to the real estate bubble bursting, that were caught up in the frenzy to buy a house that by anyone's standards would be way more than they can afford. But, lenders were willing to lend to anyone based on stated income. When asking this group, what would they do if they couldn't afford the payment? And the standard answer was they would sell it and buy something less expensive. There was no thought there that the house could drop in value below what they paid for it. I guess they thought that the real estate market only went one way and that was up.
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Now that the real estate bubble burst, there are many young adults that are facing foreclosure and possibly bankruptcy. Trying to pay for a home in an upside down real estate market is like trying to dig a hole in quicksand. Many people have up and walked from their homes and are now facing the hard truth of how the economy really works. With their credit in the tank, they have nowhere to go but back to mom and dad's. If you look around your neighborhood, you'll probably see that you have a couple families living exactly like this. Moving home might solve the kid's problems temporarily, as long as they just didn't walk from the home. They need to cut their ties and liability from their past debt. The creditor can still come after the debtor for the cost of the foreclosure and any negative balances owed on the property after the lien sale. So just when you think everything is getting better living in the security of your parent's house, the wheels can all fall off. The best way to eliminate all this liability is filing for bankruptcy. Filing bankruptcy will wipe out all the past liability, or any future liability that might be incurred on a piece of property that was foreclosed on or walked from. The last thing the debtor needs is more financial problems added to their already large stack of bills.
The second part that I haven't even mentioned yet is the possible damage to the finances of mom and dad. Depending on mom and dad's financial situation, the addition of extra household expenses can put them in danger of a bankruptcy filing themselves. Usually, when people get in their later years they start winding down and living on a fixed income. The addition of their adult children and grandchildren are probably unexpected and unplanned. The sudden financial burden put on mom and dad could easily take a toll on their savings account and income, forcing them to go back to work. Parents should be proactive and lay down ground rules before the situation spirals out of control. I know it's hard to say no, but this is a perfect situation where tough love should be exercised. It's important to understand that if mom and dad face foreclosure and bankruptcy filing, nobody will have a place to live.
If you're a parent or one of these young adults it's important to be proactive facing financial problems head on. This would be a good time to consult with a bankruptcy attorney to protect any property and finances that are left. It's stupid to keep throwing good money at bad. Use the legal power that filing bankruptcy provides to eliminate unsecured debt and any liability caused by foreclosure, judgments and lawsuits.
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