Who can help?

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I have a good credit, was never late for any payment and I did purchase a home in November of 2005. With the hope that I was going to get home equity, refinance and get money to pay my debits, I realized later that it wasn’t going happen because of the bad property value market for sellers in Massachusetts today. The house was purchased for 420K and the current appraisal is about 390K. Well, that said, I need to act soon. Since things didn’t work the way I planned, today I owe 24K in credit cards, 7K in school loan, 9K in auto loan, and 5K in other loans (total about 45K) an average of 1K of minimum payment per month and my mortgage payment is 3,200 per month. The other services bills such as oil heat, water, sewer, electricity, phone etc. sums up to 1K per month. I feel that everything is out of control. Also, I have a family member that’s really ill right now and he’s living with me. My job is not profiting as it should and my salary has been cut down a bit. I make now 1K per week after taxes which hasn’t been enough to live normally anymore, and I haven’t mentioned food and other normal life expense such transportation. I had some cash reserve that I was able to keep payments up to date. Now I have an average of 6.2K of bills per month and I earn 4K per month (2.2K per every month behind). Since 2000 I have never delayed one single bill payment, but now that the cash reserve is gone I’m really afraid what’s going to happen from here on. What can I do in this situation: Short Sale, Foreclosure, Debit Consolidation, bankruptcy? Please help!

  1. Reply
    May 1, 2011 at 5:21 am

    Sounds like a nightmare! (sorry) All I can suggest is either getting a roommate who is not ill and can work and help out with the bills?? Or you can file chapter 13 bankruptcy, keep everything you have and consolidate it all into one monthly payment. Or your other option would be to hide under a rock or disappear somewhere. I’m not trying to make fun of your situation but it sounds horrible. Try not to let it get to you to much…. Take care and I hope you win the lottery! Short sale and foreclosure would do you absolutely no good. You will not benefit $ wise at all..

  2. Reply
    May 1, 2011 at 5:24 am

    Sorry to hear about your troubles.

    As much as I hate to advise this filing chapter 13 bankruptcy may be your only way out. You make to much money to qualify for chapter 7.

    Or you might try Consumer Credit Counseling Services, they are free and will work with your creditors to lower your monthly payments and your interest rates. I used them several years ago and was debt free in 36-months.

    Either way you can keep you home and vehicle.

  3. Reply
    May 1, 2011 at 6:22 am

    I know how you feel. One thing you might check into is a credit counseling agency. They can work with your revolving accounts, like credit cards and get your payments down a little bit on them. Look in the yellow pages in your phone book. Can you refinance your car? That’s another option you might want to check into. Would you be able to pay off your mortgage if you sold your house for the 390K? If you can rent for less than 3200 a month then you might want to consider selling and renting until you get back on your feet. Another option is to try to find a second job. Something part time or doing sales. If none of the above options work for you then here’s what can happen. If you stop paying the credit cards, they will start calling you and bugging you. You don’t have to answer the phone, of course. Most of them will keep the account for a while and then they’ll call it a charge off and they’ll sell it. Whomever they sell it to will call you. After a while they will want to settle for less than you owe. Of course, your interest accrues until then. Every now and then there will be a bank who will take you to court and put a lien on your house. I speak from experience. My husband was out of work for a few years and I just couldn’t pay all of our bills. I figured we needed a place to live and utitlites and food more than we needed to pay the credit card bills. Now, I’ve been paying settlements because we are in better shape financially. Out of about 7 accounts, only one took it to court and put a lien on our house. The plus to the lien is that there’s no more interest. I’ve settled with about 4 of the others and am making payments on one more. I think there’s only one that I haven’t done anything with yet besides the one with the lien. My point is, if you stop paying your credit cards, the world isn’t going to end. It might give you time to regroup. Of course, our credit scores went down. That’s a given. But, sometimes you have to decide which is more important, food or credit score. If you don’t pay your mortgage the house will get foreclosed on. You’ll have to move but you’ll be out from under the payments. Check your library or book store for a book called, “How to Sell Your House in 5 Days.” It might help you. Good luck to you. I’ve been there and it’s not fun.

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