Bankruptcy or Debt Relief?

[Oreo Cookie]

I agree with the previous posts - sell your home, and either rent or buy a much smaller one. You need to prioritize your debt and cut back to the bare minimums. Find some part-time work for extra income. You can get ahead of the game, but it will take a lot of work and effort. Best of luck to you.

 

[mel&me]

Agree on the downsizing but other than that, there is just way too much missing info to give any real meaningful advice.

 

[momz]

More details needed

What is your household income?
Do both you and your spouse work full time?
Kids and their ages?

What are your debts?
House: what is it worth and how much do you owe, what is the monthly payment?
Cars: what are they worth and how much do you owe, what is the monthly payment?
Credit cards: how much do you owe on each one, how much are you paying? List them out.

What are you spending each month on groceries, gas, utilities, clothing, restaurants, entertainment, hair and nails, gifts, kids tuition or activities...what else?

I find it hard to believe that you have been paying on your home for 18 years yet have no equity in it. I also have trouble seeing how staying in a 4000 square foot house is going to be a viable option if you are truly facing bankruptcy.

 

[luvsJack]

The first step should be to go talk to someone at the electrical company. They need to recheck the meter if that amount is just for one month. If they are charging you some estimated amount of what you "should" have owed all these years, see if you can come up with a better agreement to pay it; one that want break you every month or even come to an agreement to NOT have to pay it.

Before you decide to downsize, your will need to know exactly what it will cost you to buy something smaller or rent. If a smaller house or rent is going to keep your housing costs the same, then its not going to help a whole lot to downsize.

Like someone else said, shut off some rooms. Close the vents and make sure the doors are closed off well. Heat only what you have to. But electric blankets and turn the heat down at night. Turn the heat way down when no one is home (I turn mine off but it doesn't get that cold here) When you are home, don't turn the heat up but a few degrees. Could even get a few electric space heaters to warm just the area of the home you are in most of the time.

As for the debt: You say you are paying just over the minimum on all of the cards. So, pay just the minimum on all but one, and put at least everything you have been paying over minimums on that one and maybe a little more. Pay them off one at a time. And don't stop until you get them all paid. Many of those debt relief places do just this. They have you pay $X a month and then they dole out the payments. They pay the cards off one at a time.

 

[NewRVLady]

4000 is crazy-ARE YOU SURE that is your LIVING area? and not the outdoor areas also?
I'd sell -move to smaller-unless you have like 8 kids or something?

Ironically, my SIL may not be able to finish paying the last 3 years of her 2nd mortgage-about to lose her job and NO SAVINGS!! Her solution? sell the house she has lives in for 35 years and live in a RV at 62 years old

 

[mnrose]

Important point about cutting up the charge cards. If you are in a hole, you need to stop digging. Stop charging. Buy nothing on credit. If you can't pay cash for it, don't buy it. Period.

I wonder if OP will be back.

 

[Minnesota!]

Why?? my winter electric bills run about 300bucks a month. now in Philly, Peco cannot shut off your electric once the temps drop so if I don't pay my bill for a couple of months, I'm in deep dodo come April

Op have you contacted the electric company? most have payment plans and grants

We pay $135/month. Xcel won't shut off here in winter, either. But, $900/month is still SUPER high. His house is 4x the size of mine...so, by my math, heating his house here would be about $540. If we went over $200/month ever, I would be looking hard at where it is going.

 

[Saimaeve]

$900 seems crazy, and I lived in South Dakota for 4 years in a badly insulated house. I would consider having the meter checked to see if perhaps it's not reading properly. I would also invest in a few hundred draft dodgers (I have no idea what they're called. But they're the long things you put in front of doors to block drafts) and wear lots and lots of layers. Heck, if my electric bill was that much, I'd be breaking out the candles and lanterns. Some companies do a flat rate over the year. So while your use may be super low in April, you still pay the same as you do in August and it's not nearly 900.

There are some debt consolidation programs that aren't terribly sketchy out there. But you'll still be paying quite a bit each month

But with that amount of debt (You didn't say what your income is, so it may not be as crazy to others as it is to me. And it may just be a drop in the bucket overall, but even if you just sell for a while at a bit of a loss, and live as cheaply as possible until you can pay off a big chunk of that. Get a 2nd or 3rd job to build up a safety net. With 2 adults working 2 jobs you should be able to get your feet under you again after a while.

 

[mnrose]

We pay $135/month. Xcel won't shut off here in winter, either. But, $900/month is still SUPER high. His house is 4x the size of mine...so, by my math, heating his house here would be about $540. If we went over $200/month ever, I would be looking hard at where it is going.

That's why knowing location would be important. Electric rates vary wildly in this country, and some places have VERY expensive electricity. Personally, I can't imagine having a 4000 square foot home heated with electric! Wildly inefficient!

 

[NewRVLady]

"as long as we've lived in the house (circa 1998). "

"e have a mortgage with 20 years left on it,"
_______________________________________________
do the math you lived there 18 years and still have 20 years on mortgage???
Also for people with money problems-WHY do you have a 4000 sq ft house?
average house for most middle class is 1800
A lot of your facts are jiving....I hope this isn't a troll post

 

[BillsBillsBills]

I am back haha! And thanks so much for the advice. A little more info. The house is actually an old store/restaurant that belonged to my grandparents. We took over the debt when it closed. It's only really an 2br 2ba in the house part, a lot of the sq footage is the old storefront and garage. We have the heat turned down in those parts but the pipes come through there (it's well water) and I was told if we turn off the heat completely in that part the pipes will freeze. I would love to sell but we are in a rural area in northern PA and there are just no buyers.

We were just breaking even before this mess, and an extra 1000 a month for the 6 months a year we need heat is way over the edge when we have no savings or disposable income. Yes the credit card mess is our fault but we haven't used them once I realized the issue. There are only 2 of us and 2 cats in the household.

I completely agree that it seems outrageous but the electric company says it's right and the only reason it hasn't been that high in the 15-20 years we lived here is the meter wasn't working. I remember my grandparents saying the bill was 400-500 when the store was open so I figured what we were paying with the commercial appliances gone was about right. Any thoughts on how we could fight it with the electric company?

 

[Happyinwonerland]

I'm with the others. What is your income, what are your other expenses? If your are paying minimums on that kind of devt, and$900 will break you, then you are living too close to the edge my friend d. Can one of you get a part time job or work some overtime. Even $100/week from babysitting a few kids on weekend nights would do wonders to help take down that debt.

 

[Saimaeve]

I'm not a homeowner (One day when we're in a place longer than a few years maybe). So I may just not be aware how this works.

But if your grandparents owned the place before you, and you've had it for 18 years. How can you still owe 20 years on it? Do they do 40 year+ Mortgages? Would you have built some sort of equity in it by being halfway paid off? Sorry, I'm just a bit confused on that aspect.

 

[Happyinwonerland]

If it's just the 2 of you then I see no reason why you can't both work 2 jobs for a year or so and kick that debt. Get rid of it before kids replace the cats. Once kids come along, it will be much harder to get your finances under control.

 

[BellsFam]

Have you considered dipping into your retirement?

Yes there's a tax penalty but if you pay it at the time if distribution it's not so bad come tax filing time. I lost my job and we ended up cleaning what I had for retirement out to live on. Honestly I'd do that before I work with a co or declare.

Your gonna have to suck up the heat bill get another job like pps have said. Weekend, evening help at stores, restaurants is out there.

Lastly...keep your spirits up! Don't let this weigh and weigh on you...

 

[srferson]

I am back haha! And thanks so much for the advice. A little more info. The house is actually an old store/restaurant that belonged to my grandparents. We took over the debt when it closed. It's only really an 2br 2ba in the house part, a lot of the sq footage is the old storefront and garage. We have the heat turned down in those parts but the pipes come through there (it's well water) and I was told if we turn off the heat completely in that part the pipes will freeze. I would love to sell but we are in a rural area in northern PA and there are just no buyers.

We were just breaking even before this mess, and an extra 1000 a month for the 6 months a year we need heat is way over the edge when we have no savings or disposable income. Yes the credit card mess is our fault but we haven't used them once I realized the issue. There are only 2 of us and 2 cats in the household.

I completely agree that it seems outrageous but the electric company says it's right and the only reason it hasn't been that high in the 15-20 years we lived here is the meter wasn't working. I remember my grandparents saying the bill was 400-500 when the store was open so I figured what we were paying with the commercial appliances gone was about right. Any thoughts on how we could fight it with the electric company?

If you can't sell, have you made any attempt to rent out the space you're not using?

 

[mefordis]

More details needed

What is your household income?
Do both you and your spouse work full time?
Kids and their ages?

What are your debts?
House: what is it worth and how much do you owe, what is the monthly payment?
Cars: what are they worth and how much do you owe, what is the monthly payment?
Credit cards: how much do you owe on each one, how much are you paying? List them out.

What are you spending each month on groceries, gas, utilities, clothing, restaurants, entertainment, hair and nails, gifts, kids tuition or activities...what else?

I find it hard to believe that you have been paying on your home for 18 years yet have no equity in it. I also have trouble seeing how staying in a 4000 square foot house is going to be a viable option if you are truly facing bankruptcy.

See, I don't think I need to know any of that. The same advice (at least for me) would stand:

Rice and beans / cut expenses to the quick. Downsize your life. No more eating out, trips, entertainment, do your own haircuts, no more gifts, no more tuition! College comes after everything but the mortgage gets paid.

 

[Happyinwonerland]

See, I don't think I need to know any of that. The same advice (at least for me) would stand:

Rice and beans / cut expenses to the quick. Downsize your life. No more eating out, trips, entertainment, do your own haircuts, no more gifts, no more tuition! College comes after everything but the mortgage gets paid.

I have to disagree with you. College is a means to a better income if you choose your educational path wisely. My degree cost less than $20,000 and I just got a raise that puts me in the over $150k/year income bracket in a low cost of living area, while in school my salary was $28,000/yr. I would have been a fool to skip college.

DH is in grad school right now. This degree is costing us another $20k, but will get him an income boost of $15k-$20k/yr, so again, we'll worth it, even though we have some loans. Eschewing college in order to stay out of debt can be a very ignorant decision.

 

[NewRVLady]

I'm not a homeowner (One day when we're in a place longer than a few years maybe). So I may just not be aware how this works.

But if your grandparents owned the place before you, and you've had it for 18 years. How can you still owe 20 years on it? Do they do 40 year+ Mortgages? Would you have built some sort of equity in it by being halfway paid off? Sorry, I'm just a bit confused on that aspect.

OP-answer please

 

[mefordis]

I have to disagree with you. College is a means to a better income if you choose your educational path wisely. My degree cost less than $20,000 and I just got a raise that puts me in the over $150k/year income bracket in a low cost of living area, while in school my salary was $28,000/yr. I would have been a fool to skip college.

DH is in grad school right now. This degree is costing us another $20k, but will get him an income boost of $15k-$20k/yr, so again, we'll worth it, even though we have some loans. Eschewing college in order to stay out of debt can be a very ignorant decision.

Um, I am addressing the op's situation, not yours. I certainly hope you wouldn't suggest they go into more student loan debt when they are talking bankruptcy and have 50k in unsecured debt on top of 25k and cannot pay their bills.

Also, I would hate to call someone ignorant who doesn't want to go into debt for an education. There are ways to get a degree without borrowing money. Ever hear of working and saving?? Also, if you are making 150k a year in a low cost area, you should be paying the tuition instead of taking out a loan and paying all of that interest. I hope your degrees are not in finance.