What is Strategic Default?
Strategic default is a deliberate decision to stop making mortgage payments, often because the property is “underwater” (worth less than the mortgage balance). It’s a risky strategy with serious consequences, but it can also offer some potential benefits in specific situations.
Benefits of Strategic Default
- Save money by ceasing mortgage payments
- Potentially stay in your home for months or years
- Possibility of renting out the property for income
Drawbacks of Strategic Default
- Severe credit score damage
- Inevitable foreclosure and forced move-out
- Potential for deficiency judgment (remaining debt liability). However, if a consent foreclosure is pursued that could eliminate any possible deficiencies.
Important Considerations
Strategic default is a complex legal matter. Always consult with a foreclosure defense attorney to understand your options and protect your rights.
- Filing for Chapter 7 bankruptcy can eliminate personal liability for the remaining debt after foreclosure, but it has its own consequences.
- A consent foreclosure can offer a quicker resolution but may limit your time in the home.
Ultimately, strategic default is a high-risk strategy with potentially severe consequences. Carefully consider the drawbacks and consult with a legal professional before making any decisions.
Call 312-493-6912 to speak with Steven J. Grace regarding your legal options regarding strategic default.
