I want to start off with stating that the information needed is not for myself. Sadly as it is, it's for my brother. He was laid off from work about a year ago, and with him and his wifes eagerness to return to Japan decided to stop payment on their house and cars. The house was taken by the bank along with their 2 vehicles.

The 2 cars were of no real value, but they still owed a lot on the house (90%?)

What would be the best steps for someone in his situation? Bankrupcy?? I think he's made some really stupid decisions, along with cashing in all of his 401k etc..:hammer :hammer :hammer :hammer

Sorry and thanks in advance..

Yes, bankruptcy. That is the crap about repos... once they do it, and auction off the assets, you still owe the balance. Bankruptcy is no joke, and shouldn't be taken lightly, but it is probably the best option... IF he understands his mistakes and will correct them in the future. His credit will be crap, so lenders will start slow & small with him after it.. which may be good.

If he files bankruptcy, is he still obligated to pay the amount owed? What's the repricussion of him not paying the owed debt?? Would he face criminal charges etc?? He had crappy credit before he pulled this stunt...

Oh by the way... as I said, he should do it if he understands his mistakes and has learned. If he hasn't, let his creditors chase him around and harass him for a while until he DOES get it. Bankruptcy is like being baptized... its a one time ticket to start over and make good choices.

LOL.. I'm proud of that one.. I'm not even religious.

No.. bankruptcy will clear all debts EXCEPT IRS tax debts, and student loans. Any secured property is taken, all unsecured credit (credit cards) goes away. You can find 100s of attorneys that will do free consultations... that would be the place to start.

You need to slap him...thats the first thing that should be done.

You need to slap him...thats the first thing that should be done.

Correct. And then he needs to pay his debts. He needs to get back to work and work like a crazy man. I don't give a rat's ass what he used to do or how much he used to make. He needs to work. Now. Today. Life has beat him up and beat him down and he needs a few wins. Going back to work is Step One.

He needs to sit down with the mortgage lender and work out a payment plan for the deficit balance. When he has saved up some money, he can call the companys the cars were financed through and offer them 50 to 70 cents on the dollar as payment in full for the deficit balances. Get those agreements in writing and do not grant any collectors electronic access to a checking account. Tell the collectors what you're doing when they call. Once he has told them when they're likely to get paid, he doesn't need to talk to them more than every 2 weeks. Do not listen to them being abusive - hang up.

There is no easy way out of this. Bankruptcy doesn't solve his problem. His problem is income and character. He needs to learn a hard, hard "I ain't never doin' that again" kind of lesson from this. But trying to cheese his way out of this with minimum pain following the dishonorable mess he's made will haunt him for years to come.