That's an easy one. You buy a house while your credit is still good, then walk from the house where you are upside down.
If you have some cash but not all the cash needed for the new house, follow these steps.
- Stop making all payments on the house you are in, including insurance payments, and bank that money.
- Two or three months before the bank forecloses, find a "renter" for the house you are in and execute a minimum 2 year lease. Make the rent very low but not wildly unreasonable.
- Wait for the bank to foreclose. They will eventually contact you. Let them know about the lease agreement.
- Bank will offer a "cash for keys" payout to get you (your renter) out of the house.
- Add cash for keys money to your other funds.
You are already upside down by $50k so if you have to take out a mortgage for that amount you are no worse off.
I've got more than a few neighbors that moved across the street or up the block that way and traded up to a better floor plan in the subdivision.
Problem is, my line of work usually requires a security clearance and it would be immediately revoked if I pulled something like that. I’ll just continue to be a good debtor until the hyperinflation hits, then pay off the mortgage with a wheel barrow full of worthless $100 bills.