What is the best way for me to get out of debt?

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My husband is 65. I am 45. We owned our own business and sold it Sept. 2008. I gave all info. to my bookkeeper re:sell of bus. when our acct. did our taxes. She called me on April 14 and told me that we owed IRS appx. $ 30,0000. I filed extension and got new CPA, he thinks he can get it down to $ 10,000. We got lump sum down, paid off Bills associated w/ Business and many personal. We now receive a monthly pymnt., interest, of about $ 4000 mo. We bought our land from friend privately in 2001 for $ 60,0000. We now only owe $ 15,000 on that. Pymnt. is $ 500 month. My mother-in-law bought us a 4 bdr. Modular in 2003. She had dementia and did not want to go into home. We subsequently got a Home Equity Loan for about $ 67,000 to build deck w/handicap access and 2car garage and purchase items for home. The home is probably now worth appx. $ 250,000. We own one vehicle. I cannot find job in this area. My mother-in law is gone now, so it’s myself, my husband, my two daughters aged 16 & 20. 20 yr old contributes financially and pays her way. I allowed my husband to move his son (age 46), and his grandson(age 12). They do not contribute. He is recovering from knee surgery and I told him he can stay until Sep.1st. We have been unable to pay our monthly expenses. I was working for a few months & made appx. $ 800 supplemental income.We are more behind every month and it’s been one year. In 2012 we will receive $ 400,000. Final pymnt on sale of business. Our credit card debt is appx. $ 10,000. We were turned down on increasing home equity loan, because credit is ruined due to inability to pay . My husband keeps saying “Let’s do a reverse mortgage” I am too young and I am against this for other reasons. #1 I would have to take name off home, Penalties, and I told my husband I would prefer to sell home deal w/ bills and IRS, and we could downsize till 2012. New owners of our business offered to pay us $ 275,000 now on sale . I don’t want to take less for business. I think our biggest prob. is too much baggage. I told my hub we should sell, get out of debt, travel around to see where we would like to relocate. Put money down on smaller place, for me him, and 16yr old. I would rather help my daughter get out on her own, and especially his 48yr old son. I think we could make it. He keeps saying where will we live… I say “If his mother had not lived w/ us & bought Home we would have moved on. ” I told him reverse mortgage not right move, I’d rather sell. Our power bill here is $ 500mo in winter & $ 300mo in summer. I am younger and not ready to retire and everyone in this smalll town thinks because we owned our businesswe are rich. I don’t think I could buy a job here. Help? Any Advice?

  1. Reply
    April 29, 2011 at 9:59 pm

    Start a new business in your new town. You, husband, 16 year old, 20 year old can all work. You need low start up cost like zero so something like an in home daycare or a assisted for the elderly since you have the place ready for wheel chairs.

    Maybe turn the garage into family space for your kids and use the extra 3 bedrooms for assisted living space. If you can’t get assisted living licensing you could rent out the extra rooms.

    Can you start the same kind of business you had before?

  2. Reply
    April 29, 2011 at 10:07 pm

    You have a lot of info listed, so I am trying to sort it out. From what I understand is that you basically owe $ 67,000 on your home due to the home equity loan and that is all that you owe on the home? Based on this assumption, here is my opinion:

    You state that your home is worth $ 250,000 but would you be able to get that much with a failing market and the current credit crunch? If you can, then sell it.

    Also your house payment is only $ 500 a month with utilities at the most $ 500 a month, bringing the total payment to $ 1000 a month. I don’t know where you live so I can only base this on my location, but I know that I can not even find a decent one bedroom apartment for that price…much less a house. But you are correct, if you can sell your home (without giving it away), then you can move into something smaller. Your payement may be a little more than what you are currently paying, but at least you would have the cash to get out of debt. Your could use these next couple of years to build your credit.

    Do NOT do the revearse mortgage, you will have your entire home stripped of equity by the time you retire.

    Also, has the IRS put any type of lein on your property? You need to take action, before they do. I would consult with a tax attorney, they have the knowledge and the power to help you negotiate with the IRS.

    It also sounds like you have too many people to take care of. I know it is hard to kick your family out but you should only be responsible for providing for your 16 year old.

    Good luck!

  3. Reply
    April 29, 2011 at 11:00 pm

    Consider moving to a town with more job opporunities.

    Consider taking the $ 275K buyout, or negotiating it up to where you can tolerate taking it. There are also, I believe, companies out there that will pay you off now in return for being assigned the right to receive the $ 400K later, but I would guess they would offer you around $ 275, too…? Might be worth checking into.

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