Should I Just Walk Away?

Jason's not just going to be able to walk away from the house he built because his builder did a bad job and left him with the mess.

QUESTION: Jason asks if it’s ever a good idea to just walk away from the house and let the bank foreclose if you’re in a no-win situation. He did a major house rebuild and spent $300,000 on the house and renovations. The builder did a bad job and walked away. He could sell the house for $250,000 and he owes $300,000 on it. Should he just walk away?

ANSWER: Stop your 401k contributions until you get through this, because you need the cash flow. Then finish fixing the house. If they take this house back, they’ll sue you for the difference and collect. Gut through this thing, get the house fixed up and continue with whatever litigation issues you have. But you can’t afford to walk away, your income is too big and they’ll go after it.