by Sundeep Kothari
Atlanta Georgia Bankruptcy Attorney
One in five homeowners underwater
One in five homeowners in the U.S. are underwater, with over 50% of homeowners in Nevada underwater. More declines are expected to follow.
This is a huge factor of why I believe the economy will not start rebounding until 2011. When a home goes underwater by a significant amount, a lot of people refuse to leave their home and file for bankruptcy. They do this because they like living there, they think the economy will rebound soon, they think the government will step in with a plan to save them, they think the mortgage company will step in with a plan to help them, they have put in a lot of money, effort, time, and life into their home.
This is a very emotional issue. In many situations, it is simply best for the person to leave the home, file for bankruptcy, rebuild savings and then purchase a smaller home in a few years. However, this sounds much easier to say than for people to do.
Home ownership is for many people the most important purchase of their life, and losing it is like losing a part of their own soul. And even when the economic realities say otherwise, people would rather be stubborn than lose not only their place to live, and continue to live somewhere where their money is getting eaten rather than move to a smaller place and save liquid cash. The pain of dealing with the present economic realities is simply too painful to be rational.
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