All across the nation, including in California, people continue to struggle with housing costs. For some, the aftereffects of predatory lending practices have been a source of struggle for many years. Others have encountered unexpected financial difficulties that simply place too much strain on an already tight budget. In many cases, people who were once incredibly proud to purchase their own home are now ready to file for bankruptcy and walk away from the property entirely.
In the early 2000s many real estate markets across the country were experiencing an unprecedented climb. Development was on the rise, with new home communities popping up in areas that were once farmland, or in small pockets within already developed suburbs. Lenders targeted prospective homebuyers whose incomes were lower than average. A number of first-time buyer programs and incentives convinced many to sign on the bottom line.
Once they were in those homes, the market went through a terrible decline. People saw the value of their homes fall, and resale opportunities grew less and less likely. For those who had refinanced at the height of the market, their payments had reach a level where there was simply no room for error. A sudden job loss, unexpected illness or injury or even a major car repair was all it took to force many of these homeowners into a cycle of missed payments, late fees and foreclosure notices.
Even today, many California homeowners continue to struggle with the aftereffects of the housing market crash. While home values are slowly on the rise, many people still have a monthly payment that is difficult to meet. In some cases, homeowners who have struggled for years are now ready to file for bankruptcy, even if that means walking away from their home. For some, Chapter 13 bankruptcy offers a chance to restructure debt and keep their house, while others find Chapter 7 to be a more appealing option.
Source: Tampa Bay Times, "Tampa Bay neighborhood ravaged by the housing crash makes its way back; but could it happen again?", Susan Taylor Martin and Jeff Harrington, Oct. 14, 2016