It is not surprising that Shane Missler, a 20-year-old from Port Richey won the lottery in January 5th’s Mega Millions lottery. His total take was $451 million however, he decided on the lump sum payment of $282 million. Why is it not surprising? Because statistics say that the age group that plays the lottery the most are millennial’s. 70% of twenty to thirty somethings buy at least one lottery ticket a year compared with 45% of seniors.
It would also not be surprising if in a few years, this young man goes broke. The Certified Financial Planner Board of Standards says, “nearly a third of lottery winners were worse off than before they became rich and eventually declared bankruptcy”. Another Florida study found, 70% of lottery winners spent every dime of their jackpot within five years. I wish him luck, no pun intended!
The debt category probably has the largest impact on the number of available distress properties on the market. Over 80% of Americans are currently in debt. The debt stays with most for their entire lives. Data from Experian FileOne and credit.com says that, “73% of American consumers die in debt”. Moreover, “the average total balance left over is $61,554” after death. Debt impacts our lives because it’s so essential to function in our country.
Debt can also be the cause or act as a “bridge” to other 7D categories. Studies show that debt can cause members to become estranged from family and friends, incur depression, drug and alcohol abuse, divorce and suicide more so than the average American.
Gobankingrates.com survey found that Americans reported “mortgage loans as the largest source of their consumer debt.
The direct effect of debt in the real estate market is foreclosure. Excessive credit obligations can cause a home owner to become delinquent on mortgage payments and lose their property. When this occurs, the lender attempts to recover the balance of the loan from the borrower, by forcing the sale of the asset used as the collateral for the loan. This process is called foreclosure.
How A Lead Is Created When Mortgage Payments Are Missed
The loan servicer typically waits until a borrower is 120 days late before filing the case in state court and beginning the foreclosure. Next, the homeowner receives a breach letter from the loan servicer. A lis pendens is a written notice that a lawsuit has been filed concerning real estate, involving either the title to the property or a claimed ownership interest in it. The lis pendens is one way of identifying that the home owner is in distress.
Bankruptcy Won’t Necessarily Save The Homeowner
Refusing to sell your home after bankruptcy is a common mistake made by home owners that include their property in a Chapter 7 bankruptcy. Bankruptcy releases owners from pre-petition debt only. Meaning, the day after the bankruptcy is filed, new debt begins and begins to accumulate. I’ve had clients that Unbeknownst to the owner over $160K worth of debt accumulated after bankruptcy. Attorneys can be more aggressive in the attempt to collect this post-petition debt because they are aware that the home owner cannot file for bankruptcy again for another 8 years.