Will Appreciate Any Information

[harry49]

I appreciate the advice of all of you. I don't want to live the remainder of my life under the weight of irretrievable debt. My credit rating is 750 (last quarterly report) because 2 1/2 years ago my cc debt was only around 5k. I lost my job to downsizing, spent the better part of a year caring for my dying mother, then had trouble finding a job. In the meantime I had an accident, with $10k in medical bills insurance would not pay and developed a gambling habit, and lost about 5k to that. It's all been downhill for 2 1/2 years. What you all have helped me with is an understanding of how to start thinking about bankruptcy, if it comes down to that. I appreciate it.

[HHM]

Yeah, you are one of those debtors that faces a difficult problem because the two goals you need to achieve

1. Keep the house
2. Eliminate your debt

Since its very possible your equity in the home exceeds the state allowed exemption, BK may not be your best option.

Just to put some numbers out there (note, I am guessing to some degree)
$26,000 debt, avg interest of 11%, with a minimum payment of 2%
That would make your minimum payment (at the outset), $520 per month (note, that amount is probably 30% of your monthly take home pay, which is ALOT)

If you were able to consistently pay $520 per month, it would take you 5.6 years to pay that balance down. Assuming you made no new charges and the interest rate does not vary.

If you are payment sensitive, and I HATE TO RECOMMEND THIS, but you may want to consider mortgaging the house...maybe not for all the debt, but at least for some of the debt to lower the overall cost of the debt to you.

However, if the ownership history on the house is in good order, you really should consider filing chapter 7. At the very least, start taking some action. Go to the county recorders office and get a copy of the deed. Schedule some free consults with attorney's in your area (see at least 3 attorneys) and find out their recommendations. Be proactive.

[JRScott]

I'm not sure I'd mortgage your house. Turning unsecured debt into secured debt is not always a good thing to do. The only way it can work is if you cancel all the credit cards after you use the mortgage to pay them off, otherwise you'll end up like my buddy who within 2 years had all his cards maxed out again.

I would consult with 3-4 lawyers in your area and see what they think is your best option.

Do you have any secured debt? (Like a car etc)

[HHM]

I'm not sure I'd mortgage your house. Turning unsecured debt into secured debt is not always a good thing to do. The only way it can work is if you cancel all the credit cards after you use the mortgage to pay them off, otherwise you'll end up like my buddy who within 2 years had all his cards maxed out again.

I would consult with 3-4 lawyers in your area and see what they think is your best option.

Do you have any secured debt? (Like a car etc)

I generaly agree with you...but if he cannot exempt the full amount of his home equity, he really has no other choice.

[JRScott]

The OP mentioned he might be willing to get another job. Can you reasonably work 2 full time jobs?

With a 26k debt that's probably 780 minimum payments a month (minimum payments are usually 3%). If you could get another job full time and make say 20k more a year, that would boost you to 49k income each year. Doing that for 2 years you probably could pay off the entire debt. However it is only feasible if you are healthy and can maintain it.

What you'd do is arrange the credit card bills after all other obligations and list them from the smallest to the largest. Called a debt snowball what you would do is apply minimum payments to all but the lowest one. Apply the most you can to it while still paying minimums to the others. Then once it is paid off, pay off the next smallest debt and so on. You have to be very careful during the time to not take on more debt.

The reason you go from smallest to largest is so that you can see progress made.

If you don't think you could work 2 full time jobs then I'd go talk to some bk attorneys and see what they think they can exempt. Be honest about your home and everything. If they don't think they could protect it, then you might consider a mortgage to pay off the credit cards. Just be sure to cancel the credit cards after paying them this way.

[B12]

Sorry to disagree about that "professional" appraisal. There are 3 ways to appraise a house depending on why you need the appraisal. The only way to appraise it for resale value is to establish "market value" and a real estate agent or broker will do one for you for free.

Call one and tell them what you need. They might charge a nominal fee, but normally will do it for free especially if you tell them you will consider using them to sell when you do one day.

[B12]

Oh, I am getting old. My intention to responding to this thread was to say, Please do not lead the agent on and tell them you changed your mind. Tell them up front what you need. Keep calling until you find one that will help.