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luvintink7
04-14-2008, 10:16 AM
I have been reading this board for a couple of months on the recommendation of a friend. I have been hesitant to ask for help because my problem is embarassing for me. I read about so many folks here that are out of debt and my problem is the polar opposite. A couple of years ago my DH became very ill with a bowel obstuction. He is self empoyed. He was unable to work for 11 months. Needless to say this has caused us to spiral into a financial disaster. Please do not tell me what we should have done as the past is in the past and I need help today. We have ended up in $65,000 in credit card debt. I feel like I am drowning. He is back to work and finally in good health. We are both working 2 jobs and just able to make the minimum payments on the cards. We do not live outside our means. You can't believe how hard it is to catch up when you have been so far behind. The CC companies have raised all out interest rates. We are paying between 29.99% and 33.9% in interest. We just can't make a dent in this debt. We feel we have two options. One is refinance our home and consolidate the debt to lower the interest and make it more managable. This will free up $747 a month to go toward the principle on the mortgage. This is a scary move because our mortgage will be 95% of the value of our home. My second choice is bankruptcy, which I know nothing about. I tried a credit counseling service and they will not let us keep one credit card. My DH absolutely cannot run his business without a credit card. Our debt was maily from cash advances to survive while he was ill. we do not have a "problem" with spending money. I have the refinnace papers here to be signed and I am terrified. I really need some opinions.

Chicago526
04-14-2008, 10:32 AM
I don't know if you'd be able to refinance to have only 5% equity, banks are tightening up and while you can still get HEL's, they want people to have more equity incase housing prices continue to fall.

I hate to say it, but your best move may be to sell the house, use the proceeds to pay off your debt, rent a place and then save for a down payment on a new home. If you use most of the money you were using to pay off cc's to save for a down payment, it wouldn't even take you that long.

This isn't a flame AT ALL, but this is a prime example why all working adults need to have short and long term disability insurance. it will pay the bills while you can't work and avoid situations like this. Again, not a flame, just an FYI for others reading the thread.

Tnkrbelle565
04-14-2008, 10:39 AM
I'm assuming that you have talked to your CC Companies and tried to get your interest rates lowered?

Toby'sFriend
04-14-2008, 10:39 AM
are you refinancing to a fixed rate or adjustable rate?

After you refinance, what % of your income will your housing payment be?

merryweather's twin
04-14-2008, 10:45 AM
I would refinance. It will let you make your min payments and give you breathing room. The home loan inst. rate will be much lower and you can pay extra! Your credit will be better with the cards payed off ...I would put the other cards up (water block in freezer or get rid of them)except the one he needs so you do not use them. I would not be worried about 95% of the home .... Most people are right there with you when they purchase their home new. Make any extra payment on the prin. and in a year or 2 make it a 15 year note.
I would also suggest that you cut the extra job hours some after you are doing better. Life is too short and if he has been ill you should be spending time with him enjoying life.... Not worring and working so much. Good luck.:goodvibes

clarabelle
04-14-2008, 10:48 AM
Do you have a car you could sell for something cheaper?
Anything else you can sell? (a lot of people here selling old gold)

Toby'sFriend
04-14-2008, 10:51 AM
would not be worried about 95% of the home .... Most people are right there with you when they purchase their home new.

Yes, and many people who financed 95% of their homes and then saw their home values drop by 20% in 6 months, now find themselves stuck in a home that they can't afford the payments on and can't sell because they own more than it is worth.

ALWAYS ALWAYS ALWAYS think very long and hard about converting unsecured debt (credit cards) to secured debt (a home loan).

It might be a good move, it might be a terrible move. But it is not something that you just do without very careful consideration.

luvintink7
04-14-2008, 10:53 AM
We do not qualify for a home equity line. We do qualify for a refi at 5.8%. Not using the cards will not be a problem for us except his business. He has to travel and really needs a credit card for a variety of reasons with his company. I am glad we kept our company afloat while he was ill because it is a huge source of our income. We did what we had to do to survive. I just don't want to make any stupid moves from here on out.

Cheshire Figment
04-14-2008, 10:54 AM
I'm assuming that you have talked to your CC Companies and tried to get your interest rates lowered?
If you have not done this, you should.

When you call the credit card companies ask to speak to a supervisor. Get names and direct phone numbers if possible. If a supervisor will not lower your rates, ask to speak with their manager.

Tell them your situation and mention that you are considering filing for bankruptcy. Let them know this will be necessary if you cannot get the rates lowered to a "normal, non-penalty" rate. This will scare them as if you file bankruptcy they will be out all of the money.

SandraVB79
04-14-2008, 10:56 AM
OK, tell me I am naive, but...

Your DH needs a CC for his business. I would think this is a professional CC linked to the business.
If you (DH and you personally) do the CC consolidation thing (or whatever it is called), you can't keep any CC. I would guess these are personal CCs, right?
So, there is no way your DH can have a business one and you both have no personal ones?

Over here, business and private has to be completely divided.


Other than that, good luck on getting out of debt! :hug:

luvintink7
04-14-2008, 10:57 AM
He drives a 92 and I drive an 02. We do not have fancy cars. Selling a car or gold is not going to bring in $65,000. We thought of selling the house but in this market it could take a year. I can't pay 30% interest for another year...it is throwing away money.

luvintink7
04-14-2008, 11:01 AM
If you have not done this, you should.

When you call the credit card companies ask to speak to a supervisor. Get names and direct phone numbers if possible. If a supervisor will not lower your rates, ask to speak with their manager.

Tell them your situation and mention that you are considering filing for bankruptcy. Let them know this will be necessary if you cannot get the rates lowered to a "normal, non-penalty" rate. This will scare them as if you file bankruptcy they will be out all of the money.


HA they are a joke! I begged them. They do not care and I did try the bankruptcy thing. They did not care.

luvintink7
04-14-2008, 11:04 AM
OK, tell me I am naive, but...Your DH needs a CC for his business.* I would think this is a professional CC linked to the business.If you (DH and you personally) do the CC consolidation thing (or whatever it is called), you can't keep any CC.* I would guess these are personal CCs, right?So, there is no way your DH can have a business one and you both have no personal ones? Over here, business and private has to be completely divided.Other than that, good luck on getting out of debt! :hug:

DH is a sole proprieter.* He is a contractor.

Teresa Pitman
04-14-2008, 11:18 AM
Can your husband incorporate the business, so that it becomes a separate entity, and then the business could have its own credit card? Because I honestly think, from what you've said, that bankruptcy might be the best route for you.

If that's not possible, do you have family members who might be willing to add your husband onto a credit card they have?

Teresa

hinodis
04-14-2008, 11:23 AM
My dh owns a business as well and it can be a very scary thing sometimes. I am sorry to hear about your situation. If you are confident in your DH's business, then the refi may be the best choice for you right now. How is the housing market in your area? If you are planning to stay there for a long time then it will not matter if your financing high. It will go down fast if your paying extra money into the principal. Good Luck

Irin997
04-14-2008, 11:29 AM
I have been reading this board for a couple of months on the recommendation of a friend. I have been hesitant to ask for help because my problem is embarassing for me. I read about so many folks here that are out of debt and my problem is the polar opposite. A couple of years ago my DH became very ill with a bowel obstuction. He is self empoyed. He was unable to work for 11 months. Needless to say this has caused us to spiral into a financial disaster. Please do not tell me what we should have done as the past is in the past and I need help today. We have ended up in $65,000 in credit card debt. I feel like I am drowning. He is back to work and finally in good health. We are both working 2 jobs and just able to make the minimum payments on the cards. We do not live outside our means. You can't believe how hard it is to catch up when you have been so far behind. The CC companies have raised all out interest rates. We are paying between 29.99% and 33.9% in interest. We just can't make a dent in this debt. We feel we have two options. One is refinance our home and consolidate the debt to lower the interest and make it more managable. This will free up $747 a month to go toward the principle on the mortgage. This is a scary move because our mortgage will be 95% of the value of our home. My second choice is bankruptcy, which I know nothing about. I tried a credit counseling service and they will not let us keep one credit card. My DH absolutely cannot run his business without a credit card. Our debt was maily from cash advances to survive while he was ill. we do not have a "problem" with spending money. I have the refinnace papers here to be signed and I am terrified. I really need some opinions.

How much longer are you planning on staying in the house? If you don't plan on moving for 5 - 10 years, then don't worry about the 95% LTV. You will gain equity the longer your stay in your home. If you plan on trying to move ASAP than clearly a 95% LTV is a bad idea.

As long as you can afford the monthly mortgage payment (which I'm assuming the credit card will be wrapped up in..??) then go for it. And like you said, put the $747 a month towards the payment to pay down that $65,000 of debt! Good luck in whatever you decide.

luvsJack
04-14-2008, 11:36 AM
You said he travels and what not with his business and needs a card. Is it to actually make charges on or for reservations, car rentals and things like that? We use a VISA check card for those things. Is that a possiblity?

We are in the process of paying off our cc through credit counseling; it is a great relief and they do get your interest way down. I couldn't get the cc companies to talk to me either, but InCharge did.

LSchrow
04-14-2008, 11:38 AM
first, & most important, take a deep breath (really deep, all the way down;) ).

if you look at the mountain of debt as insurmountable, you'll have trouble conquering it. think of how long it took for the debt to accrue, how this was a "life episode" that you are now repairing (plus the fact that many, many people have gone through similar circumstances, & came through poorer, but with excellent lessons learned on financial survival :) ).
the refi is a good idea (if it can be done as you said, & you intend to stay in the house). do as figment said: CC's want their money, & if you file for bankruptcy, they will lose a lot of it.
also, look at the debt in simple terms by breaking it down & putting it on paper (keep a financial "journal" to organize your bills & debt). as each debt is satisfied, mark it, give yourself a "pat on the back", & start attacking the next one.

a financial crisis can be temporary, & it sounds like you are on the right track to making sure it is:thumbsup2
glad to hear your DH is better ~ now comes the (comparatively) easy part. good luck :hug:

luvintink7
04-14-2008, 11:44 AM
You said he travels and what not with his business and needs a card. Is it to actually make charges on or for reservations, car rentals and things like that? We use a VISA check card for those things. Is that a possiblity?

We are in the process of paying off our cc through credit counseling; it is a great relief and they do get your interest way down. I couldn't get the cc companies to talk to me either, but InCharge did.



Can you tell me more about InCharge??

Chicago526
04-14-2008, 11:58 AM
He drives a 92 and I drive an 02. We do not have fancy cars. Selling a car or gold is not going to bring in $65,000. We thought of selling the house but in this market it could take a year. I can't pay 30% interest for another year...it is throwing away money.

First, are you sure you'll actually be approved for the 95% refi? Are you sure your house will apraise high enough, are you sure your credit scores are high enough? Are you sure your increased CC debt won't disqualify you?

Second, are you sure it will take a year to sell the house? Some markets aren't as slow as others, especially if your house is priced right and is in good condition in a desirable neighborhood. You can always have a real estate agent take a look at it and give you an opinon.

IF you can truely qualify for the refi and IF you are as certain as anyone can be that you'll be able to handle the new payment (how long will it take for your husbands business to generate income after such a long absence? has his field changed while he was sick, has buisness in the area slowed down?) and IF you are positive that you won't run up the cards again, then a refi could be your best option. But be very careful, if business isn't as good as it's been in the past, if your husband or you (God forbid) get sick again, or any other disaster befalls you, you're going to lose the house anyway, only it will be a lot less controlled than putting it up on the market yourself.

If you don't qualify for the refi, then I do think you next best option is to sell the house (price it right and it WILL sell) pay off you debt, and rent while you save like crazy people to buy another house.

BTW, have you checked with Consumer Credit Counsiling Service (CCCS). I thought that they let you keep one CC open for emergencies and such, but maybe that's changed. Pull up the website for United Way and follow their link to them, they're the best credit counselors out there and the only one that gets consistantly good reviews, a lot of credit counselors are glorified crooks. If you can work with them and they let you keep a CC open, then I'd go this route!

aclov
04-14-2008, 12:07 PM
First of all, I'm sorry to hear you are in a situation like this. I too was in a financial mess and it's a nightmare, so I totally understand. DH's business is in a slump but he won't get out, I hope you find some answers and the creditors will reconsider in working with you.

Another board to check out is www.creditboards.com

clarabelle
04-14-2008, 12:22 PM
He drives a 92 and I drive an 02. We do not have fancy cars. Selling a car or gold is not going to bring in $65,000. We thought of selling the house but in this market it could take a year. I can't pay 30% interest for another year...it is throwing away money.

No selling a car is not going to bring in 65,000. I thought you might have new cars.
I know selling old gold wouldn't either. I was thinking every little thing might help -you know just to get you a little ahead.

MomtoGKC
04-14-2008, 12:41 PM
I would not use any old debt company, only call Consumer Credit Counseling. they are the only legit consolidators out there. I called them once and they were very helpful and sent me lots of information. Luckily I never had to use them, my husband was able to get us on CC payment plans with very low interest - like 1-2% - on his own by calling and telling them this was their only chance to get the money. We aren't allowed to use the CCs anymore, but that's fine - we're not planning on ever using them again anyway.

I would also be very wary of doing a refi. My husband has been working on so many foreclosures recently, it's really a sad situation.

Good luck - you will find something that works for you!

jacksonsmom
04-14-2008, 12:57 PM
I will be the lone voice and say talk to a bankruptcy lawyer.

Bankruptcy is there for people that have been put in your situation, loss income, illness, etc.
$65,000 is a lot of money. You guys are already working 2 jobs each. You can only be stretched so thin.

I would think long and hard about the refi, just because of the housing market right now.
That is why I suggest just talking to a bankruptcy lawyer. Doesn't mean you have to file, just see what your options are.

I know people look at people who file as evil or people who don't know how to manage their money. That isn't always the case.
I had a good friend who had to file, after her loser of a ex-husband left her with a lot of debt. I even went with her to the lawyer. I helped her research debt help and bankruptcy. I learned a lot. Yes, there are some people who abuse the system, but there are people there who need it and should be able to file without the shame.

I am not saying you need to file, but I would suggest talking to a lawyer. They will usually do the first meeting for free. The good lawyers will tell you honestly if you should file or not.
There are a few options with bankruptcy also, one is where you pay back X amount of your debt and then it is done.

You really should look into all options openly including bankruptcy and then decide what is right for YOUR family.

GOOD LUCK!!

minnie1928
04-14-2008, 01:29 PM
Second, are you sure it will take a year to sell the house? Some markets aren't as slow as others, especially if your house is priced right and is in good condition in a desirable neighborhood.

This is true, I got a contract on my house after only 20 days on the market (about 10 days ago).

I don't have alot of advice, only lots of :grouphug: .

I took my my to CCCS a few years ago and they were great. I don't know if they'll let you keep a CC or not. Mom didn't have any more cards that were still open at the time so it didn't really apply to her.

DiznEeyore
04-14-2008, 01:36 PM
I will be the lone voice and say talk to a bankruptcy lawyer.

Bankruptcy is there for people that have been put in your situation, loss income, illness, etc.
$65,000 is a lot of money. You guys are already working 2 jobs each. You can only be stretched so thin.

I would think long and hard about the refi, just because of the housing market right now.
That is why I suggest just talking to a bankruptcy lawyer. Doesn't mean you have to file, just see what your options are.


ITA!! It's called "Bankruptcy Protection" for a reason. OP is in the exact type of situation bankrupcty is intended for, rather than the thousands who have taken advantage of it to walk away from debt as a result of overindulgence.

Good luck, OP -- I hope you can find a way to get through this.

roadtripper
04-14-2008, 01:51 PM
He drives a 92 and I drive an 02. We do not have fancy cars. Selling a car or gold is not going to bring in $65,000. We thought of selling the house but in this market it could take a year.

I totally understand what you're saying about needing 65,000, but try to rethink it as little steps. Sure, a couple hundred for old gold is a long way from 65,000, but it's also true that every little bit helps. Anything you can MAKE money on can allow you to put money somewhere else. Selling an 02 car and driving a clunker may also free up some cash to put towards the debt.

I think most people feel overwhelmed when they think of the big number, but do better when they break it down to how much extra they can put towards debt THIS month.

Anyway, glad to hear that DH is doing better. Good luck!

cheerforchelsea
04-14-2008, 01:57 PM
I have been in your shoes - and it is not an easy place to be....My husband had cancer 20 years ago and a lot of the expense was considered to be "above reasonable and customer charge" so therefore was not covered by our insurance. Refinance the house and be done with it.....you will recover we did and our not cover medical bills were in excess of $200,000.....Look at it this way you can take the interest paid on the refinance off on your income tax - credit card interest you cant. A little prayer goes up for you!!:hug:

dvcgirl
04-14-2008, 02:01 PM
I really hate the idea of rolling that unsecured debt into your mortgage. It's just a bad idea to move unsecured debt over to a secured debt. I your case, I really think it's a bad idea.

For one, your DH has had health issues....what if he has a relapse or complication of some sort? He's a contractor....not exactly a secure job title these days with the worst housing market in the past 50 years. And so if DH gets sick again, you risk losing the home. If he can't find work or hours are cut as a contractor...you risk losing your home.

And finally, if you were actually able to get a HEL that takes you up to 95% of your home value, I can't imagine that the rate is very good. And I'm wondering if you were pre-approved for that loan because not many banks are underwriting home equity loans taking you up to 95% loan to value these days.

If you're both already working two jobs and you can't meet those minimum payments (or barely), I can't imagine how you turn it around. I see two options....sell you house, pay off all debts and rent until you can get back on your feet. Or speak to a bankruptcy attorney.

I would *not* roll that debt into your house though....

Toby'sFriend
04-14-2008, 02:04 PM
ITA!! It's called "Bankruptcy Protection" for a reason. OP is in the exact type of situation bankrupcty is intended for, rather than the thousands who have taken advantage of it to walk away from debt as a result of overindulgence.

Good luck, OP -- I hope you can find a way to get through this.

I agree also and I'm about as anti-bankruptcy as a person can get.

But you know what? when credit cards start acting like this they are just begging for it. A 33% interest is simply ridiculous.

Do I agree that you should pay back the $65000? yes, right up to the point where they make the interest rate so high that a normal person has no chance of paying it. They are drowning you with greediness and at this point I have to go with --- number #1 priority is to protect yourself. Giving up your home equity is not protecting yourself.

I'm really against you putting your house up for play in this circumstance. Right now, you have a bit of power here with these credit card loan sharks. You can call them up and say, "get reasonable or get nothing." If it were me, I don't think I'd give that up.

Good Luck.

audrabolster
04-14-2008, 02:05 PM
In todays market, I think your best bet is to either sell your house, or opt for bankruptcy. I think refinincing can really get you into more of a pickle with the way the market is. I think the best bet is to contact a financial advisor to ask their opinion.

choirfarm
04-14-2008, 02:14 PM
If anyone else gets in this kind of situation, go talk to your doctors and the hospitals FIRST BEFORE you put it on the credit card. Did you have insurance? Doctors and hospitals will often negotiate on your bill if you show them true financial need. I've known doctors who have treated people for free or close to it, because of their true financial need. Also, does your church know what is going on? Many times our church takes up money for cases such as these.

eliza61
04-14-2008, 02:14 PM
I really hate the idea of rolling that unsecured debt into your mortgage. It's just a bad idea to move unsecured debt over to a secured debt. I your case, I really think it's a bad idea.

For one, your DH has had health issues....what if he has a relapse or complication of some sort? He's a contractor....not exactly a secure job title these days with the worst housing market in the past 50 years. And so if DH gets sick again, you risk losing the home. If he can't find work or hours are cut as a contractor...you risk losing your home.

And finally, if you were actually able to get a HEL that takes you up to 95% of your home value, I can't imagine that the rate is very good. And I'm wondering if you were pre-approved for that loan because not many banks are underwriting home equity loans taking you up to 95% loan to value these days.

If you're both already working two jobs and you can't meet those minimum payments (or barely), I can't imagine how you turn it around. I see two options....sell you house, pay off all debts and rent until you can get back on your feet. Or speak to a bankruptcy attorney.

I would *not* roll that debt into your house though....


I'm going to second this. Do not risk your house. Even if you have to declare bancruptcy you can recover.

Kaler131
04-14-2008, 02:15 PM
I will be the lone voice and say talk to a bankruptcy lawyer.

Bankruptcy is there for people that have been put in your situation, loss income, illness, etc.
$65,000 is a lot of money. You guys are already working 2 jobs each. You can only be stretched so thin.

I would think long and hard about the refi, just because of the housing market right now.
That is why I suggest just talking to a bankruptcy lawyer. Doesn't mean you have to file, just see what your options are.

I know people look at people who file as evil or people who don't know how to manage their money. That isn't always the case.
I had a good friend who had to file, after her loser of a ex-husband left her with a lot of debt. I even went with her to the lawyer. I helped her research debt help and bankruptcy. I learned a lot. Yes, there are some people who abuse the system, but there are people there who need it and should be able to file without the shame.

I am not saying you need to file, but I would suggest talking to a lawyer. They will usually do the first meeting for free. The good lawyers will tell you honestly if you should file or not.
There are a few options with bankruptcy also, one is where you pay back X amount of your debt and then it is done.

You really should look into all options openly including bankruptcy and then decide what is right for YOUR family.

GOOD LUCK!!

I agree! You don't wan't to go even further into debt by refinancing your mortgage and risk losing your house. My DH works in finance and he said that when they are looking at a person's credit/financial history, it looks worse for someone who does the "Credit Counsiling " than if they filed bankruptcy.

Toby'sFriend
04-14-2008, 02:20 PM
If anyone else gets in this kind of situation, go talk to your doctors and the hospitals FIRST BEFORE you put it on the credit card. Did you have insurance? Doctors and hospitals will often negotiate on your bill if you show them true financial need. I've known doctors who have treated people for free or close to it, because of their true financial need. Also, does your church know what is going on? Many times our church takes up money for cases such as these.

That is great advice for the medical bills.

But it doesn't make up for lost income and pay the electric bill or buy the groceries while the business owner is unable to work. When you own your business, there is no such thing as paid sick leave.

LisaNJ25
04-14-2008, 02:29 PM
I would not use any old debt company, only call Consumer Credit Counseling. they are the only legit consolidators out there. I called them once and they were very helpful and sent me lots of information. Luckily I never had to use them, my husband was able to get us on CC payment plans with very low interest - like 1-2% - on his own by calling and telling them this was their only chance to get the money. We aren't allowed to use the CCs anymore, but that's fine - we're not planning on ever using them again anyway.

I would also be very wary of doing a refi. My husband has been working on so many foreclosures recently, it's really a sad situation.

Good luck - you will find something that works for you!

I agree.. Also the card he wants to use for the company do not add to the plan. You not have to add all of your credit cards.

I have very positive things about http://www.myafs.org/.. they are formally genus.org. I used them as well as a few friends and I have no complaint. They were able to lower the interest on my credit cards while I paid them off. Yes, those cards were also closed.

You will make one payment a month to the ccc and than pay the creditors. I never had a problem with payments being late or any issues.

Any other questions just email me.

Best of luck to you and your family. :grouphug:
Just leave off one the one

Chicago526
04-14-2008, 02:30 PM
That is great advice for the medical bills.

But it doesn't make up for lost income and pay the electric bill or buy the groceries while the business owner is unable to work. When you own your business, there is no such thing as paid sick leave.

Which is why buisness owners and self employed people should always build in disability insureance into their business plans and operating expenses. Again, no flame to the OP, hindsight is 20/20 but anyone out there that is reading this, regardless if you are employeed by a company or own your own, get insurance! If you own your own business, it might be called something else, like "income replacement insurance", it's slightly different because traditional disability pays out based on your salery, but it's essentially the same thing, talk to your insurance agent about it, they can point you in the right direction.

palavra
04-14-2008, 02:37 PM
In Charge is a reputable company. We used them a few years ago when credit card debt was getting to be a problem. We have since quit using cc's. Anyway, In Charge helped us reduce our interest rate on our two cards to 9% from 28%. We owed about$8,000 in on our two cards, and I know we couldn't have paid it off if it weren't for In Charge. BTW, we were also in debt due to medical problems; I had emergency surgery and had to quit work for a while. Medical problems can ruin your finances!

luvintink7
04-14-2008, 03:56 PM
Thank you all for such wonderful advice and kind words. I was very afraid about posting this. I am trying to avoid bankruptcy because I feel it is our debt and we should pay it. Our house payment with the refi will be $370.00 a month more then we pay now. A small amount in comparison to the payments we are making for the credit cards. Our cars are paid for so I really don't want to sell them. I don't want to buy a clunker and then have it break down. I contacted CCCS and they are not available in my state. I do like the tax advantage with the refi. I hate to ruin our credit because I know credit affects ayuto insurance premiums. A refi will raise the credit score. My mortgage guy is certain we will qualify because we have been there for 13 years and never a day late on our house payment and our income is good enough for the loan. I think I will follow everyones advice and see where each option leads me. I can't wait until I have made a decision and begin new. My DH has a clean bill of health PTL.

FirstTimertoDiz
04-14-2008, 04:07 PM
OP, first of all, hugs to you both- I know this may seem like an insurmountable task right now, but maybe if you can break it down into smaller pieces, it will seem more manageable.

First of all, forgive me if this is a dumb question, but do you have a working monthly budget? I know you said you live within your means, but how willing are you to live below your means for a little while? DH and I have been doing a Total Money Makeover since Jan 1, and we were surprised at places we cut our monthly budget that we never thought of before. For example, we don't eat out more than once a month now, we cut back on cable/phone/internet bill by calling the company and asking for a price break, we changed cell phone plans, we lowered our car insurance, etc. You may have some "found" money there.

I don't think anyone has mentioned it yet here, but I would really recommend going to a library and checking out the book Total Money Makeover by Dave Ramsey. It really isn't rocket science, but he is very motivating to a lot of people looking to get rid of their debt. He also has a radio show that you can call into and get free advice on your situation.

Also, before you refinance, I would look at your debts one by one on paper. How many cards are the $65,000 spread out on? Which one has the lowest balance, and how fast could you pay it off if you concentrated on just that one? We had originally thought about refinancing, but once we sat down and really crunched the numbers, we will be much better off by paying off the smallest debt first, then using that payment to snowball onto the next lowest one, etc.

I wish you all the best- financial issues can really be a burden on everyone. I am glad dh is doing well with his health, and it sounds like you both will work great together to get out of debt.

Lisa

PS- I frequent another board that uses Dave Ramsey's principles. I am not sure if I can post the link here, but if you want to pm me, I will gladly share that with you.

DVCJEN
04-14-2008, 04:11 PM
Bankruptcy would be the last thing you would want to do with your husband being a DBA/sole pro. All of the business assest would also be liquidated as part of the bankruptcy. Since the new bankruptcy laws went in to effect a few years ago, if your combined incomes are above the thresholds (65K ish in my state) then you would be forced into a Chapter 13 repayment plan.

NotUrsula
04-14-2008, 04:27 PM
While I HATE the thought of risking the house, the other alternatives would likely destroy your best source of income, the business. I think that the re-fi is probably your best bet. However, I think that you should move heaven and earth to get out from under that second mortgage as soon as humanly possible. Keep working that second job and throw it all at the re-fi amount.
Contracting isn't all that stable a field at the moment; you need to be building up a nest egg ASAP to protect the house.

hrslvr142
04-14-2008, 04:38 PM
We were in the same situation several years ago. We did declare bankruptcy, Chapter 7 I believe, and we paid back every penny we owed. The only thing the bankruptcy did was allow us to keep our house which we would have lost and also go through several years of explaining to people why we declared bankruptcy when we applied for credit. It did, of course, freeze everything so no more interest could accrue. Good luck to you whatever you decide.

ObsessedwiththeMouse
04-14-2008, 04:45 PM
OP, I wanted to say that I've been in your situation and it's hard. :hug:

Luckily, my DH and I are now debt free (except for our mortgage) and we have vowed to never get back into that situation again.

I also agree that I wouldn't risk putting your house on the line.

No words of wisdom, just a :grouphug: to say hang in there.

pppiglet
04-14-2008, 11:59 PM
Due to the company I worked for closing after I had been there 30 years and DH's overtime being taken away, we are in the same mess you are. We are going to check into refinancing this week also. It will take too long to pay off $65,000 with all the interest piling up.

SandraVB79
04-15-2008, 04:58 AM
I'm going to second this. Do not risk your house. Even if you have to declare bancruptcy you can recover.

Call me once again naive, but... if you declare for bankrupcy, can you keep your house? I can't really imagine you don't have to pay your bills anymore but yet you can keep your house. I don't know how it works, but I'd think they sell your house etc, use that money to pay as much bills as possible, and the rest you don't have to pay anymore.

If you CAN keep the house, stop reading here, because then the rest of my post doesn't count anymore.
If you CAN'T keep the house in case of bankrupcy: refinance. Yes, in case the planets line all up and everything goes wrong, you'll loose your house. But you'll loose it too in case of bankrupcy. So, in the case of refinance, there is a chance you can keep it, if all goes well...

AnnaS
04-15-2008, 06:52 AM
My computer is not allowing me to scroll down pages to read all the posts here (don't ask).

So I apologize if this has been mentioned.

I am sorry for hear about your financial situation. My dh has been out for 7 months due to two heart attacks and a quadruple bypass - thank God your dh is okay now.

Do you have immediate and very close family members (parents, brother, sister, grandparents) who would be willing to give you a loan for 5-6%, 7% interest and get it in writing with an attorney? They would earn more interest than the bank and you would be saving 20% interest a month. Perhaps just half of the amount - anything to help you out and get back on your feet?

It might be as a last resort - sometimes it causes more problems within the family - your parents, in-laws might be better than a sibling. Again, this is just a thought.

Too bad the cc companies won't listen when some seem to report they have had success doing this.

I wish I could read all the other posts (might computer might let me later - so I probably should have waited).

We rec'd the state short-term disability ($170 a week - minus some taxes), only lasts 6 months though. It's too late for you now but I wonder if self-employed people qualify for these for the future in case someone else reads this and might go through this or knows someone who might go through this. It's not much and barely paid for groceries but it was something. We definitely did not know about it. I thought my dh would qualify for one at work - but he only gets it at work if he qualifies for SSD. Had I known that or read the fine print, I would have paid for private disability insurance.

I am sure you got some great tips here and I hope I can read all the posts later (or whenever my computer/screens don't act up).

Good luck and keep us posted hopefully with good news.

ObsessedwiththeMouse
04-15-2008, 07:26 AM
Call me once again naive, but... if you declare for bankrupcy, can you keep your house? I can't really imagine you don't have to pay your bills anymore but yet you can keep your house. I don't know how it works, but I'd think they sell your house etc, use that money to pay as much bills as possible, and the rest you don't have to pay anymore.

If you CAN keep the house, stop reading here, because then the rest of my post doesn't count anymore.
If you CAN'T keep the house in case of bankrupcy: refinance. Yes, in case the planets line all up and everything goes wrong, you'll loose your house. But you'll loose it too in case of bankrupcy. So, in the case of refinance, there is a chance you can keep it, if all goes well...

Yes, as long as your payments are current, you are allowed to keep your house in a bankruptcy.

mumom95
04-15-2008, 07:35 AM
Call me once again naive, but... if you declare for bankrupcy, can you keep your house? I can't really imagine you don't have to pay your bills anymore but yet you can keep your house. I don't know how it works, but I'd think they sell your house etc, use that money to pay as much bills as possible, and the rest you don't have to pay anymore.

If you CAN keep the house, stop reading here, because then the rest of my post doesn't count anymore.
If you CAN'T keep the house in case of bankrupcy: refinance. Yes, in case the planets line all up and everything goes wrong, you'll loose your house. But you'll loose it too in case of bankrupcy. So, in the case of refinance, there is a chance you can keep it, if all goes well...

I'm no expert, but I think you get to keep the house. At least I know someone who declared bankruptcy a few years ago and got to keep the house. The part that ticks me off is that her house is worth a little over $500,000 (and that's a pretty nice house in the midwest), which is twice what my house is worth, and she has it beautifully decorated, which she paid for by credit card that she then didn't have to pay off because she filed bankruptcy. It just makes me mad that someone who declares bankruptcy to get out of paying debt gets to keep a house that is nicer than mine. And her situation was not hardship, they basically just lived way over their means. But I do think they have changed the bankruptcy laws in the past couple of years, so maybe that has changed.

And OP, please don't feel like I am slamming you. Your situation is completely different, and I think your situation is why bankruptcy protection was started in the first place.

Irin997
04-15-2008, 07:41 AM
Just in case you missed my post, if you refi and are planning on living in the house for another 5+ years, throw that extra money you are "saving" from the refi/debt consolidation at the mortgage payment, and pay off that $65,000 at your new 5.8% mortgage rate--remember, that extra amout goes right to the principle, not interest. If you stay in the house for another 5+ years, your house will appreciate and the 95 LTV won't matter anymore because you will have gained equity in your home.

Also, you mentioned the tax breaks....another ++.

IF this is a viable option and you qualify for the refinance, go for it. Otherwise, go with bankruptcy. I think the refinance is the BEST way to save your credit. If you can't do it, then bankruptcy is definitely your next best option.

Good luck and keep us posted! :grouphug:

Dr Pepsi
04-15-2008, 07:41 AM
I'd talk to an attorney and see exactly what the pros/cons of bankruptcy would be in your situation. If it would take you a year to sell the house now, it sounds like your housing market is lousey. Refying for 95% of your house value is probably not the best idea.

Bankruptcy is not ideal, but it's not the end of the world either. Mostly you want to be concerned about how a bankruptcy might affect your husbands business.

So talk to a lawyer. An initial consultation should be fairly inexpensive or even free.

ETA: I'm not a bankruptcy expert, but I know that you can keep your house. I believe you'll settle with your other creditors for a much lower amount than you owe and will have a payment plan to pay off a portion of your debt. This is what a friend of mine did when she had to declare bankruptcy. She was so glad she did it. She would never have gotten out from under all her debt on her own (her husband became sick and permanently unable to work).

MomtoGKC
04-15-2008, 08:15 AM
I didn't know CCCS wasn't available in every state. Here is a link to reputable credit counseling services by state that is put out by the US Dept. of Justice.

http://www.justice.gov/ust/eo/bapcpa/ccde/cc_approved.htm

If the link doesn't work I just Googled "consumer credit counseling services by state"

bnorm27
04-15-2008, 08:21 AM
DEFINITELY speak to an attorney before you decide to go the bankruptcy route! The ramifications to your husband's business my ultimately be the deciding factor.

I would definitely look into some sort of Long Term disability insurance for your DH. Heck, even something like AFLAC could have helped you pay some of these bills during his illness.

Refinancing may be your only viable option. But, as one of the PP's stated, what percentage of your income will the new mortgage payment be? Refinancing is great, but if you can't pay for food, electricity, etc., it won't do you any good.

Good luck!

ObsessedwiththeMouse
04-15-2008, 08:38 AM
I'm no expert, but I think you get to keep the house. At least I know someone who declared bankruptcy a few years ago and got to keep the house. The part that ticks me off is that her house is worth a little over $500,000 (and that's a pretty nice house in the midwest), which is twice what my house is worth, and she has it beautifully decorated, which she paid for by credit card that she then didn't have to pay off because she filed bankruptcy. It just makes me mad that someone who declares bankruptcy to get out of paying debt gets to keep a house that is nicer than mine. And her situation was not hardship, they basically just lived way over their means. But I do think they have changed the bankruptcy laws in the past couple of years, so maybe that has changed.

And OP, please don't feel like I am slamming you. Your situation is completely different, and I think your situation is why bankruptcy protection was started in the first place.

The bankruptcy laws have changed in that you have to qualify for a "means test". Each state has their own median income for a family of 2,3,4, etc....If your income is below your state's median income for your family size, you qualify.

The means test and taking 2 online/over the phone courses are what took effect a few years back.

Although it may anger you, overspending is not an "illegal" way to file bankruptcy.

Again, good luck to the OP. :grouphug:

becky1960
04-15-2008, 08:58 AM
There is such a thing as a prepaid credit card, if you can file bankruptcy without involving your home if could free up money for a prepaid card or if one card is paid off you can keep that card but many cards are now tied together.

Crystal824
04-15-2008, 08:59 AM
I am a bankurptcy attorney. I typically deal with Chapter 11 situations. With that being said, I would not refinace the house. I would speak with a bankruptcy attorney in your area...a reputable attorney who specializes in consumer bankruptcy. The consultations are usually free.

Your situation is excatly what bankruptcy was intended for...with that being said the bankruptcy laws are quite technical and it is best for an attorney in your state to evaluate your situation. Usually, you can keep your home and most of your assets (up to a certain amount), which can vary state to state. This includes your husband's tools, etc for the business. Again, depending on the value. You typically must be under the median income level to file a chapter 7, which also vaires from state to state.

I would be wary about refinancing as it rolls all the unsecured debt into secured debt. If something should happen in the future and you were unable to pay the mortgage, you would lose the house. Bankruptcy would not help at that point.

Even if you don't qualify for a Chapter 7 because you make too much money or have to many assets, you can file Chapter 13, which usually allows you pay back what you can afford in unsecured debts.

Instead of bankruptcy, you might consider credit counseling. I would probably look into both. Be wary about the agency you choose, there are many rip-offs out there. I recommend Consumer Credit Counseling Services (CCCC). They are a good reputable company. I saw many people recommend INCharge on here. I don't know anything about them. You want a company that will negoitate for you regarding your interest rates and payments. Not a company that will set up an account for you and hold the money for you until you can make a settlement offer (an offer lower than the amount of your debt made in a lump sum payment to settle the account in full). You could do this yourself and the companies typically charge high fees to do this. While they are holding your money, it is very likely you will get sued.

Good Luck in what ever you decide to do. If you want to PM me, you can. Again, this is general advice as I have no idea what state you live in and certainly don't know enough information to provide you with specific advice. Finally, bankruptcy while pursuant to federal law does vary from state to state.

dunbarfamily
04-15-2008, 09:01 AM
I don't really have anything to add. Just really really think. This is such a tricky situation. Are there any other credit counselor agencies that could help? Do you have any friends/relatives in banking that would give you good advice in your best interest without trying to sell you a loan? I'm just trying to think of ways you coud get a few more professional opinions and really discuss your situation completly. What about the local chamber of commerce? I know that sounds nuts, but maybe they can help figure out if husband can get the business its own cc and then you guys could file. (I'm not saying that's the way to go, again, just trying to think of other ways of help).

Praise God that your husband is now in good health! He is good! Live life to its fullest!

I will keep you in my thoughts. Good luck! You can and you will get out of this. It won't be easy, but have faith...you CAN do it!

DiznEeyore
04-15-2008, 09:04 AM
Hey, Obsessed you're back! And you've now filed bankruptcy, right?


Although it may anger you, overspending is not an "illegal" way to file bankruptcy.


Not illegal, but I'd call it immoral.

ObsessedwiththeMouse
04-15-2008, 09:36 AM
[QUOTE=DiznEeyore;24488884]Hey, Obsessed you're back! [QUOTE]

Back from where? :confused3

DVCJEN
04-15-2008, 09:54 AM
[QUOTE=DiznEeyore;24488884]Hey, Obsessed you're back! [QUOTE]

Back from where? :confused3

I think she meant that you were gone for a while after the whole banckruptcy/Escalade/Disney trips/Disney Cruise stuff from a few weeks back.

PatMcDuck
04-15-2008, 10:04 AM
I was sort of glad (and sad) to see this post. We are also in a mess with credit card debt triggered (mostly) by a very ill child. We have another child that is handicapped, but it was when the youngest went thru a long complicated illness, I had to stop working almost completely. With frequent treatments and appointments, I am still mostly out of work. DH missed 3 months of work in 2007 as well.

We are about to take out a line of credit to erase the CC debt. We WILL sell the house in about 2 years. Youngest will then be out of high school at least. Then we will downsize gladly, relocate, etc. We would not be able to sell our house now anyway, when I drive around all I SEE are for sale signs. Our cars are old, over 150,000 miles. We mow our own lawn, we do our our repairs if we can. There is so little (union)construction work now, DH is working and living in Las Vegas while we are in NJ.

Some people are in a financial mess because they went crazy buying things. Other people are in mess for other reasons........

SweetPeasMom2
04-15-2008, 10:06 AM
I don't have a solution but just felt the need to tell you aren't alone. We are in a lot of cc debt. I know the feeling of the endless spiral. Just wanted to give you big hugs.

LSchrow
04-15-2008, 10:16 AM
Some people are in a financial mess because they went crazy buying things. Other people are in mess for other reasons........

and those "other people" should not feel at all ashamed or embarrassed because they did important things with what money they had....pride & integrity are the words that come to mind when people try their hardest, & the "bump in the road" almost takes them down......:hug:

Toby'sFriend
04-15-2008, 10:20 AM
[QUOTE=ObsessedwiththeMouse;24489557][QUOTE=DiznEeyore;24488884]Hey, Obsessed you're back!

I think she meant that you were gone for a while after the whole banckruptcy/Escalade/Disney trips/Disney Cruise stuff from a few weeks back.

sure, followed by your own bankruptcy filing.
So, how's the planning for the next Disney trip going, now that you are "debt free" ????

I was sort of glad (and sad) to see this post. We are also in a mess with credit card debt triggered (mostly) by a very ill child. We have another child that is handicapped, but it was when the youngest went thru a long complicated illness, I had to stop working almost completely. With frequent treatments and appointments, I am still mostly out of work. DH missed 3 months of work in 2007 as well.

We are about to take out a line of credit to erase the CC debt. We WILL sell the house in about 2 years. Youngest will then be out of high school at least. Then we will downsize gladly, relocate, etc. We would not be able to sell our house now anyway, when I drive around all I SEE are for sale signs. Our cars are old, over 150,000 miles. We mow our own lawn, we do our our repairs if we can. There is so little (union)construction work now, DH is working and living in Las Vegas while we are in NJ.

Some people are in a financial mess because they went crazy buying things. Other people are in mess for other reasons........

I'm really sorry Pat, so are some tough choices to have to make.

BBGirl
04-15-2008, 01:21 PM
I will be the lone voice and say talk to a bankruptcy lawyer.

Bankruptcy is there for people that have been put in your situation, loss income, illness, etc.
$65,000 is a lot of money. You guys are already working 2 jobs each. You can only be stretched so thin.

I would think long and hard about the refi, just because of the housing market right now.
That is why I suggest just talking to a bankruptcy lawyer. Doesn't mean you have to file, just see what your options are.

I know people look at people who file as evil or people who don't know how to manage their money. That isn't always the case.
I had a good friend who had to file, after her loser of a ex-husband left her with a lot of debt. I even went with her to the lawyer. I helped her research debt help and bankruptcy. I learned a lot. Yes, there are some people who abuse the system, but there are people there who need it and should be able to file without the shame.

I am not saying you need to file, but I would suggest talking to a lawyer. They will usually do the first meeting for free. The good lawyers will tell you honestly if you should file or not.
There are a few options with bankruptcy also, one is where you pay back X amount of your debt and then it is done.

You really should look into all options openly including bankruptcy and then decide what is right for YOUR family.

GOOD LUCK!!

Not the lone. I say the same thing. Talk to a bankruptcy lawyer before you refi. Don't wait do it NOW. You could rearrage the furniture on the Titanic but it would still sink. That is all you are doing with all this other stuff, just rearraging it. DO NOT refi your house to pay off credit card bills. It's not the right choice.

rebe1968
04-15-2008, 02:56 PM
Try www.fixmyuglycredit.com...I feel for you i was in your shoes as well and it's not easy...I hope and wish you the very best

mumom95
04-15-2008, 03:15 PM
nevermind, shouldn't have written what I did, was in a bad mood

2Monkeys
04-15-2008, 04:06 PM
I am really shocked that so many people are advising bankruptcy. About 7 years ago, we had about $40k in credit card debt and refinanced our house to pay it off. Now because of the downturn in the market, if we sold our house right now, we would have no equity - but we also do not have the credit card debt. Looking back, I'm glad we chose refinancing. We were throwing money down the drain on cc interest and making no headway with the debt. If you plan to stay in your house and can comfortably make the new payment, I would definitely refinance. Bankruptcy affects your credit for many years, and could adversly affect your husband's business. If you think you might want to sell your home in the next couple of years, a refi is probably not a good idea. Just remember that bankruptcy affects your credit for 7 years, whereas promptly paying your mortgage on time will make your credit score better. Good luck to you!

DVCJEN
04-15-2008, 04:16 PM
I am really shocked that so many people are advising bankruptcy. About 7 years ago, we had about $40k in credit card debt and refinanced our house to pay it off. Now because of the downturn in the market, if we sold our house right now, we would have no equity - but we also do not have the credit card debt. Looking back, I'm glad we chose refinancing. We were throwing money down the drain on cc interest and making no headway with the debt. If you plan to stay in your house and can comfortably make the new payment, I would definitely refinance. Bankruptcy affects your credit for many years, and could adversly affect your husband's business. If you think you might want to sell your home in the next couple of years, a refi is probably not a good idea. Just remember that bankruptcy affects your credit for 7 years, whereas promptly paying your mortgage on time will make your credit score better. Good luck to you!

You make some good points. And Bankruptcy can stay on even longer that 7 years--the impact won't be on your score but they can show on the report for 10+ . We had an applicant last week whos CH 7 from 1997 was still showing on the report!

DiznEeyore
04-15-2008, 04:21 PM
I think she meant that you were gone for a while after the whole banckruptcy/Escalade/Disney trips/Disney Cruise stuff from a few weeks back.

That's exactly what I meant. ::yes::

Mary2e
04-15-2008, 04:27 PM
If you have not done this, you should.

When you call the credit card companies ask to speak to a supervisor. Get names and direct phone numbers if possible. If a supervisor will not lower your rates, ask to speak with their manager.

Tell them your situation and mention that you are considering filing for bankruptcy. Let them know this will be necessary if you cannot get the rates lowered to a "normal, non-penalty" rate. This will scare them as if you file bankruptcy they will be out all of the money.This will not work. Credit card debt can no longer be discharged in the most common forms of bankruptcy. You have the debt for life. The law was changed by congress about 3 or 4 years ago after heavy lobbying by the credit card companies.

rentayenta
04-15-2008, 05:35 PM
:goodvibes I agree that you should talk to a bankruptcy atty. Fully educate yourself on what filing vs refi would mean and go from there. I wish you the best.

Irin997
04-16-2008, 07:30 AM
I am really shocked that so many people are advising bankruptcy. About 7 years ago, we had about $40k in credit card debt and refinanced our house to pay it off. Now because of the downturn in the market, if we sold our house right now, we would have no equity - but we also do not have the credit card debt. Looking back, I'm glad we chose refinancing. We were throwing money down the drain on cc interest and making no headway with the debt. If you plan to stay in your house and can comfortably make the new payment, I would definitely refinance. Bankruptcy affects your credit for many years, and could adversly affect your husband's business. If you think you might want to sell your home in the next couple of years, a refi is probably not a good idea. Just remember that bankruptcy affects your credit for 7 years, whereas promptly paying your mortgage on time will make your credit score better. Good luck to you!

Hey, I've posted about this twice. It really makes zero sense to file bankruptcy if they plan on staying in the house longer than 5 years. In addition to the fact that their credit will not be trashed but will be improving and they will feel good about the fact that they paid off their own debt. But both of my posts were skipped over. :confused3

mommytoone
04-16-2008, 07:45 AM
My mom just got in contact with a credit consolidating company that is willing to help her for only like $49 to join. She pays about $238 a month for a specific debt. Stepfather was not workng for 8 mos and got behind had to use CC to live. They by no means live outside theri budget, they don't even have health insurance because can't afford the extra money. I will get the info from her and forward to you. It's atleast worth a shot. She was going to file bankruptcy but did this instead and will be debt free in 4 years. They even talk to the CC company so you don't have to. Don't feel alone, I know lots of people swimming in debt. Good Luck

luvintink7
04-16-2008, 10:18 PM
We were about to sign those papers this week for the refi but you guys have given me alot to think about. I am first looking into the credit couseling option. My DH is VERY much against filing bankrupcy. He is afraid we will lose our assets including some of the equipment for his business. We have friends that filed bankrupcy about 2 years ago and they went through hell. They had to sell their house, their boat, and they are still renting. That really scares us. Anyone out there have experience with bankrupcy?

DiznEeyore
04-16-2008, 10:26 PM
We were about to sign those papers this week for the refi but you guys have given me alot to think about. I am first looking into the credit couseling option. My DH is VERY much against filing bankrupcy. He is afraid we will lose our assets including some of the equipment for his business. We have friends that filed bankrupcy about 2 years ago and they went through hell. They had to sell their house, their boat, and they are still renting. That really scares us. Anyone out there have experience with bankrupcy?


iVillage has a really excellent Debt Q&A/Bankruptcy board that you might find helpful:

http://messageboards.ivillage.com/n/mb/listsf.asp?webtag=iv-mldebtqa&nav=start

Good luck deciding how to proceed -- I really hope things work out for you! :goodvibes

luvintink7
04-20-2008, 10:27 AM
DH just put a whole new spin on our situation. I had forgot to mention one detail about our situation. We currenly have a ballon on our mortgage. We have one year left and our mortgage rate will become an adjustable rate. This is an important factor to think about. The refi guy has locked us in for 45 days at 5.875%. Does this change anyone's advice? I am just so anti-bankrupcy that I can't even bring myself to call an attorney about it. I really don't want to ruin my credit by using a credit counselor. I just don't know what to do. Everyone's advice sounds so good..but I am soooo overwhelmed and so afraid.

hinodis
04-20-2008, 10:32 AM
I am so sorry to hear about your dilemma. Just remember that seeking information about a bankrupcy or credit counseling does mean you are choosing that alternative. You are just going to be getting information, not committing to take action. I would suggest you learn about all your options so you can make an informed decision. Good Luck.

Suz D
04-20-2008, 10:44 AM
I am so sorry to hear about your dilemma. Just remember that seeking information about a bankrupcy or credit counseling does mean you are choosing that alternative. You are just going to be getting information, not committing to take action. I would suggest you learn about all your options so you can make an informed decision. Good Luck.

hinodis I think you meant to say that seeking information does NOT mean you are choosing that alternative. Good input from you on that. Information gives power and control.

OP, I would say with a rate of 5.875 and the whole balloon thing I would refi.

hinodis
04-20-2008, 10:52 AM
hinodis I think you meant to say that seeking information does NOT mean you are choosing that alternative. Good input from you on that. Information gives power and control.

OP, I would say with a rate of 5.875 and the whole balloon thing I would refi.

YES, thanks for catching that!

bdcp
04-20-2008, 11:01 AM
Refi. The market is cyclical and it will rebound. That is a great interest rate and we have had 5% or less equity in our first three homes. We've also refied every home we've ever had until this one and our credit scores are fabulous. You can't be afraid to use what you have to pull yourself back up. The market when we sold the third home was phenomenal and we had 20% to put down on this house. That's what happens. I would avoid bankruptcy at all cost, especially with the equity you do have currently in your home, you'd be giving up a lot and hurting your ability to borrow at a decent rate for quite a while. The balloon would scare me a lot more than the 5% equity.

I would also shop around for new CC's and find the lowest rates possible. We have never had over 12% interest on any CC.

snowbunny
04-20-2008, 11:03 AM
There was a thread a few weeks ago from someone who "didn't get it" as far as the big deal of universal health coverage (she had insurance through her DH's employer). Can it be any more clear than this?

OP, I'm sorry for your situation. My DH and I are also self employed and a major health crisis would be a disaster. In your shoes I would try to find free help - your local SBA may be able to point you in the right direction. Whatever you do, don't sign a new mortgage loan with an adjustable and/or balloon rate; that is exactly the method by which tens of thousands of people have lost their homes in the current real estate downturn.

bdcp
04-20-2008, 11:08 AM
There was a thread a few weeks ago from someone who "didn't get it" as far as the big deal of universal health coverage (she had insurance through her DH's employer). Can it be any more clear than this?

OP, I'm sorry for your situation. My DH and I are also self employed and a major health crisis would be a disaster. In your shoes I would try to find free help - your local SBA may be able to point you in the right direction. Whatever you do, don't sign a new mortgage loan with an adjustable and/or balloon rate; that is exactly the method by which tens of thousands of people have lost their homes in the current real estate downturn.

Their current loan is a balloon which they need to get out of. My guess, from the rate is that their new loan is a conventional one.

Irin997
04-20-2008, 11:14 AM
Refi. The market is cyclical and it will rebound. That is a great interest rate and we have had 5% or less equity in our first three homes. We've also refied every home we've ever had until this one and our credit scores are fabulous. You can't be afraid to use what you have to pull yourself back up. The market when we sold the third home was phenomenal and we had 20% to put down on this house. That's what happens. I would avoid bankruptcy at all cost, especially with the equity you do have currently in your home, you'd be giving up a lot and hurting your ability to borrow at a decent rate for quite a while. The balloon would scare me a lot more than the 5% equity.

I would also shop around for new CC's and find the lowest rates possible. We have never had over 12% interest on any CC.

REFI, REFI, REFI. Are you planning on moving in less than 5 years? If not, then REFI! As this poster said, its all cyclical and will rebound. Save your credit, throw the money you are saving at your new principal, and get it paid off.

Luckymomoftwo
04-20-2008, 11:26 AM
I'm sorry that you and your husband had to go through such a horrible time and I'm glad that he's better now! I know how frightening it is to even have to consider filing bankruptcy. There are two types..Chapter 7 and Chapter 13. If you file chapter 7 you automatically lose your house since you've been there 13 years. If you file Chapter 13, you may be able to keep your house. But, with that much debt, your payments to the Chapter 13 plan may be the same amount as what your monthly mortgage payment is going to go up.

I am in the mortgage industry, and if you are getting 5.875 fixed rate, you are doing good! Even if you are paying one or two points to get that rate, and if you are planning on staying in the house for many more years to come, then the points (and refinancing) make sense.

Are you refinancing for 30 years or 15 years? Will you both still have to work two jobs after you refinance? I hope at least one of you will be able to go back to just one job...sounds like you need a break somewhere! :hug: I hope everything works out for you!

luvintink7
04-20-2008, 11:30 AM
It is actually an FHA loan. I, personally do not want to live here for five more years. It is a nice house, we built it, but I wanted to live out in the country more. I have no problem with staying here as long as it takes to get things paid down. We will have to pay PMI until we have more equity in the home. I figured and refigured things and this is the bottom line. With the income from our other jobs we can pay every bill and we have about $300.00 a month leftover after the bills are paid. This does NOT include any money from the business. Currently we need at least $500 a month from the business income just to pay the bills. (we havn't even eaten yet!) It does seem like a good situation to refi. Any income we generate from the business will be put toward the principal of the loan. I know this sounds easier then it will actually be because life happens. Posting on this board was the best thing I have ever done. Everyone here has just been wonderful:grouphug:

npmommie
04-20-2008, 11:49 AM
OP i agree with the other who said refi.........the rate is good, you don't want an adjustable rate mortgage, get out of that as fast as you can.
good luck!

lovepooh
04-20-2008, 11:50 AM
Does he really have to have a credit card? Can't he just have a Visa Debit Card which works similar to a credit card but would attached to his business bank account?

luvintink7
04-20-2008, 12:01 PM
I'm sorry that you and your husband had to go through such a horrible time and I'm glad that he's better now! I know how frightening it is to even have to consider filing bankruptcy. There are two types..Chapter 7 and Chapter 13. If you file chapter 7 you automatically lose your house since you've been there 13 years. If you file Chapter 13, you may be able to keep your house. But, with that much debt, your payments to the Chapter 13 plan may be the same amount as what your monthly mortgage payment is going to go up.

I am in the mortgage industry, and if you are getting 5.875 fixed rate, you are doing good! Even if you are paying one or two points to get that rate, and if you are planning on staying in the house for many more years to come, then the points (and refinancing) make sense.

Are you refinancing for 30 years or 15 years? Will you both still have to work two jobs after you refinance? I hope at least one of you will be able to go back to just one job...sounds like you need a break somewhere! :hug: I hope everything works out for you!


Our fixed rate is for 30 years. We are not paying any points for this rate. The closing costs are $2162 and the prepaid items, such as the interest, PMI, hazard insurance..etc will be $1953. The current house payment that we have is $1075 and the new one will be $1430, a difference of $355. We built the house in 2000.

luvintink7
04-20-2008, 12:11 PM
Does he really have to have a credit card? Can't he just have a Visa Debit Card which works similar to a credit card but would attached to his business bank account?

Many of you have asked this question. The reason he needs the CC for business is the company may be doing a large commercial job and we have to have capital available to buy materials, rent equipment, ...etc. He also needs one for business expenses if he has a job out of town. He needs a CC for hotel reservations. Our debit card does not always have the cash available that is needed for a job. In the contruction industry many general contractors are on a draw and we are as well. We will get paid but we may have to spend thousands before the draw becomes available. We no longer have the funds for our business because we took such a big hit while he was sick. We still had to pay for the advertising, insurance, office expenses..and so on when there was no income. I have tried so hard to get things under control and I just could not. I have faced reality and it is ugly. We are over our heads and we know it. Our son has taken out student loans for his college education so we no longer have to pay his tuition. That has helped as well. We will not see Disney for a very long time:sad2: I will be vacationing in the back yard!

hinodis
04-20-2008, 03:15 PM
It sounds like you and you family are doing the responsible thing. I think after everything I have read hear that the refi is the best option for you. The payment seems like it will be managable for you. How are things with your business? Maybe there sre some ways to work at increasing your business so that you can pay down the principal on the refi. I wish you and your family all the best.

Luckymomoftwo
04-20-2008, 08:08 PM
Our fixed rate is for 30 years. We are not paying any points for this rate. The closing costs are $2162 and the prepaid items, such as the interest, PMI, hazard insurance..etc will be $1953. The current house payment that we have is $1075 and the new one will be $1430, a difference of $355. We built the house in 2000.

Ok, now that rate sounds even better - no points, 30 yr fixed at 5.875!! I'm sure your monthly credit card payments are way more than $355 a month, so this sounds like a good move, AND you'll be saving your credit, too! And if your current mortgage has an escrow account, you should be receiving that back after you refinance, so that will put a little more cash back in your pocket.

We will not see Disney for a very long time:sad2: I will be vacationing in the back yard!

Once you get on your feet after the refinance, you can always shop on Ebay and purchase a few little things to place in your backyard to give it a Disney feel! :goodvibes Seriously, though, I am so sorry! I hope you recover fast and your husband's business gets super busy with lots of income!! And then maybe you'll get to go to Disney sooner than expected. Here's some pixiedust: to help give you faith and hope!

JeanfromBNA
04-20-2008, 10:20 PM
Another recommendation for the Dave Ramsey daily radio show, his books, Financial Peace, The Total Money Makeover, and the website, DaveRamsey(dot com). You can call the radio show for free and discusss your situation with Dave who will walk you through solutions. He has been there and done that and lives what he preaches. The radio show is broadcast throughout the USA and he's now on the FOX tv network. Dave does not endorse bankruptcy because he's been through it, but he's epathetic and honest with callers.

yupikgal
04-23-2008, 01:21 AM
We have a similar situation, but sadly, we have a 2nd from previous cc debt, and now are in the same situation again, due to my unemployment for an extended period of time. I have a great job now, it's steady income and has great benefits. We struggle month to month with high gas and food prices, and we have two teens to feed. My husband is getting a raise next month, so that should help a bit.

Between the two mortgages (one 30 yr at 5.875%, the 2nd 15 yr @ 7.5%) we owe $172k. The new debt is $46k (not including 5k for vehicle that we will be able to pay off in Oct with money we have coming) I think our equity in the first is about $82, (this is based on the value - what we owe, right?) We don't have ANY extra cash to put towards closing costs, I wonder if our mortgage company would consider rolling it into the mortgage? Any suggestions would be nice. I'm not sure how that works. I'd love to just have one payment and then I want to CUT UP the credit cards!! I'm sick of having this hanging over our heads. I just want it to be gone for good!!

HELP??

Luckymomoftwo
04-23-2008, 10:25 AM
We have a similar situation, but sadly, we have a 2nd from previous cc debt, and now are in the same situation again, due to my unemployment for an extended period of time. I have a great job now, it's steady income and has great benefits. We struggle month to month with high gas and food prices, and we have two teens to feed. My husband is getting a raise next month, so that should help a bit.

Between the two mortgages (one 30 yr at 5.875%, the 2nd 15 yr @ 7.5%) we owe $172k. The new debt is $46k (not including 5k for vehicle that we will be able to pay off in Oct with money we have coming) I think our equity in the first is about $82, (this is based on the value - what we owe, right?) We don't have ANY extra cash to put towards closing costs, I wonder if our mortgage company would consider rolling it into the mortgage? Any suggestions would be nice. I'm not sure how that works. I'd love to just have one payment and then I want to CUT UP the credit cards!! I'm sick of having this hanging over our heads. I just want it to be gone for good!!

HELP??


Yes, on a refinance, if you have enough equity to pay off your existing mortgage balance(s) and pay your closing costs, your mortgage company should be able to roll it into the mortgage. I hate credit card debt, too, but unfortunately I just bought my house two years ago with minimum down and I don't have enough equity to do anything!! :mad:

And, your equity is the value of your house less your mortgage balance on first and second mortgages. Sounds like you have an excellent rate on both your first and second mortgages. If you do refinance, try to keep it to just ONE mortgage and don't do a first and second again, you may not get such a good rate on the second. Although, if it saves you enough money on your monthly payments by paying off the credit cards, and it makes sense that way, then go for it. PM me if you have any questions!! :goodvibes