Written by South Carolina Bankruptcy Lawyer, Russell A. DeMott
Many of my recent bankruptcy filings are due to what I call “real estate meltdown.” The decline in the real estate market was inconceivable only a few short years ago. Here in the Charleston, South Carolina area, real estate never went down by more than a percentage or two, and that was in the mid 90s with the closing of the Charleston Naval Shipyard and Navy Base. So when the real estate meltdown happened, people were caught off guard. And if they didn’t take their money off the table in time, they got burned–badly.
Below I’ve reproduced an account written by one of my Summerville bankruptcy clients about their bankruptcy experience. These folks, admittedly, were speculating in the real estate market. They’d done well for a while, and then the market crashed. What they don’t tell you is that the tried to work with their lender on those Florida properties for two to three years, with no luck. The lender rebuffed any attempts the clients made to try to deal with the delinquent loans.
Their story is reproduced below:
We bought two lots in Florida. The plan was to flip the ocean view lot and use the money to build a house on the oceanfront lot and sell this for a profit. We’d just made $255,000 in six months flipping a lot in a nearby neighborhood. We thought we would be able to do the same thing on more expensive oceanfront land. We borrowed another 1.8 million. Then came Katrina, Rita, and the collapse of the market. We were stuck holding onto sand, making payments from income, savings, and 401(k). We also owned a large beach house that we were renting in the panhandle of Florida. Every month we were robbing Peter to pay Paul. Greed got us into trouble. Realizing we could not continue making even interest payments, we stopped making any payments sometime in late 2008. Banks and creditors were calling all hours day and night. The sheriff was at the door every month with another summons. This was all very disruptive to work and a happy family life. We realized we were in serious trouble, and needed a solution, so we considered bankruptcy. It turns out bankruptcy was a blessing for us. We filed a Chapter 7 bankruptcy. We now have a fresh start and have learned some tough life lessons. We are now looking forward to a more simple life.
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Notice Required by SC Rule of Professional Conduct 7.1 : “Any result the endorsed lawyer or law firm may achieve on behalf of one client in one matter does not necessarily indicate similar results can be obtained for other clients.”
