[Christien]

What about getting sued by the bank when they foreclose and sell? If he's upside down, the bank will sell it for less then what he owes, then I would imagine they'll pursue him for the difference, costs and penalties.

I work in subprime car financing and lots of people just walk away from their leases/loans. What they don't realize is that we'll pursue it:

-foreclose/repossess (on credit file)
-sell the asset
-collection agency for deficiency/penalties/costs (on credit file)
-legal action when collections doesn't get results (on credit file)
-wages/bank account(s) garnished (on credit file)
-lien on new house and/or car (on credit file)

So you not only get your credit rating completely destroyed, you've got collection agencies hounding you, then that escalates to lawyers, then if you ignore it, you'll find your wages garnished and your bank accounts drained. Or the other option is to lawyer up, and it's a slam-dunk case for the credit granting agency.

These things don't just go away. The only time it makes sense to walk away is if you're already a deadbeat, have nothing to lose, and make a living from non-garnishable wages (pension, welfare, child support, disability).