Bankruptcy or Debt Relief?

[mefordis]

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.

I would guess they refinanced a few times and took some equity out.

 

[Happyinwonerland]

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. There are ways to get a degree without borrowing money. Ever hear of working and saving??

If OP and/or wife have a clear plan for college with a career that would pay significantly more, I would have no trouble telling them to take on more loans to obtain an increase in come, then use that added salary to pay down debt for a few years. Working and saving to go to college without debt can take years (if ever) to save up the money.years that they could have been earning tens of thousands of dollars more. That's a big loss just to avoid debt. Debt is a tool, and it can be used wisely. Taking out loans to get a college degree in a field where good paying jobs are plentiful is a wise use of debt.

 

[mefordis]

If OP and/or wife have a clear plan for college with a career that would pay significantly more, I would have no trouble telling them to take on more loans to obtain an increase in come, then use that added salary to pay down debt for a few years. Working and saving to go to college without debt can take years (if ever) to save up the money.years that they could have been earning tens of thousands of dollars more. That's a big loss just to avoid debt. Debt is a tool, and it can be used wisely. Taking out loans to get a college degree in a field where good paying jobs are plentiful is a wise use of debt.

If you can't come up with 20k for your spouse's graduate degree when you make 150k in a low cost area I don't think I'd be offering budget advice on this thread.

 

[tvguy]

Before you do ANYTHING, find a non-profit credit counseling service to go over your bills and your income. The most important thing you left out is your income, which is NONE of our business.
After watching all those Gail Vox Orlade/Suze Orman type shows, I really have a hard time believing if you qualified for a mortgage for a 4,000 square foot house, that you don't have the income to pay all those bills. I think you just need some guidance on how to allocate that income to pay your bills. And if you are 10 years into your mortgage, assuming 30 years, I suspect if you refinance your interest rate would be half what you have now based on what mortgage rates were in 2006.

 

[Procrastinate]

I have worked for a couple of different utilities. Generally for a meter error we can go back a couple of years to correct the bill, but we can't go back indefinitely. We also have to give the customer a reasonable amount of time to pay the errors. If we backbill for two years, you get two years to pay the amount in arrears. If they are charging you for their error, you should be able to make payment arrangements with them.

Also, you mentioned it used to be a business. Commercial rates are different than residential rates. Make sure they are charging you the right rate. Or is this the reason for the error? Did they just find out it should be considered a residential account?

 

[justgrace]

I don't have any advice, but just wanted to say that I'm sending good thoughts to you! That's a really tough situation to be in.

 

[Happyinwonerland]

If you can't come up with 20k for your spouse's graduate degree when you make 150k in a low cost area I don't think I'd be offering budget advice on this thread.

The raise was recent, and our finances are just fine thanks for your concern, but I'll take note that I need permission before posting to a thread. Is there an entrance exam, or do I just ask your permission directly?

OP, I really hope you and your wife can figure out how to increase your income and live within your means. Paycheck to paycheck is stressful and no way to live.

 

[Gumbo4x4]

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.

I have to assume they've refinanced. We owe 17 years on our home & bought it in 2000. We've refinanced 4 times - 30, 30, 25, and most recently 20. Had we done 30 every time, we'd have 27 year left on a house we bought 16 years ago.



OP, Chase has a card now that allows balance transfers with 0% and no transfer fee. It's a temporary stop-gap, but could save you some $.

 

[DLgal]

Walk away from the house if you can't sell it. Let it foreclose. Start over at an apartment. Rebuild your credit.

 

[sarah4770]

I cant believe that 990 a month for your electricity is right. I'd call the electric company back and speak to someone else. How many kilowatt's is that? It just seems impossible in a 2br/2bath. Are your water pipes downstairs insulated?

 

[WebmasterKathy]

#1: No vacations, ESPECIALLY Disney vacations! You cannot afford them, and need to put absolutely all of your income toward paying down your debt.

#2: Sell any assets you own of tangible value- real estate, cars (if you can replace them with lower cost models), timeshares/DVC/collections. Anything you can liquidate should be converted to cash and used to pay down your debt.

#3: ZERO eating out. ZERO dollars spent on entertainment. Eat rice and beans if necessary, find free things to entertain yourselves.

#4: Second jobs- even if that means cashiering at WalMart or working at McDonalds, you need to increase your income while cutting your expenses.

You have a lot of debt to pay down, and making minimum payments isn't going to cut it. You have to take an aggressive, serious, focused approach to tackling this. Bankruptcy, IMHO, is dishonest and essentially theft. Those who rack up debt should responsibly own and pay off that debt. And that means you pay that debt before incurring any more debt, especially for travel or entertainment. Those categories need to disappear from your budget entirely until you are debt free.

 

[Happyinwonerland]

You might want to double check this with a plumber, because I am not an expert, but could you wrap the pipes in heat tape instead of heating the entire downstairs? Seems like it would save you a ton. I would also try renting out the retail space so you can generate some income.

 

[Julie's Haircut]

#1: No vacations, ESPECIALLY Disney vacations! You cannot afford them, and need to put absolutely all of your income toward paying down your debt.

I was curious if the OP would mention an upcoming Disney vacation. I've seen a few threads on the Theme Park Strategy forum where the posters are in dire financial situations but they need and deserve an expensive stay at the Grand Floridian.

 

[indygirl99]

First take a deep breath. It can seem extremely overwhelming. Been there done that. I went the debt consolidation route after a divorce, didn't really learn my lesson and about 10 years later went the Dave Ramsey route and DID learn my lessons.

You say the property was your grandparents so I imagine there is sentimental value and selling is not really what you want. My parents owned a family business but the "home" part was 900 sq feet so I get where you are coming from.

Close off the business part and turn the heat down. You only need it about 40 degrees to keep the pipes from freezing if as I suspect they are running through the concrete and can't be wrapped. Plastic or foam any windows and door to decrease drafts. Do what you can to reduce electric usage in the home part. Talk to the electric company and get the bills averaged over 12 months.

You are married so the debt belongs to both of you, you are a team. Work together to get it paid off. Freeze the credit cards so you stop using them. Cut eating out, buy generic etc.

Talk to a NON profit debt consolidation company to see what that option offers, but do it as a couple not as her debit not mine thing.

Look at Dave Ramsey. Look at Suze Orman. They both have solid options. Look at bankruptcy but know it will be chapter 11 and you will be repaying.

AFTER you have looked at ALL the options then together choose the one that will work the best for both of you. There is no easy way out but you will learn a lot about yourselves in the process.

 

[VillainFavs]

You've had the property for 18 YEARS and don't have any equity in it AND still have a ton of debt? Have you been vacationing? Spending a lot?

Basically it comes down to two choices... Spend a lot less or make a lot more. You need to figure out how you do that.

 

[indimom]

We had a rough financial patch when we were a young couple with young kiddos. We were managing our car payment and credit card debt until DH lost his 20 hours of overtime a week (which we were treating like regular income - mistake!). Then one of the kids ended up inn the hospital for 3 weeks. We were overwhelmed.
We sold one car and made do with the other. We moved the credit card debt onto cards with 0 interest options (yes, there were transfer fees, but it was much less in the long run). We shut off the satellite and made use of the public library for our entertainment. We didn't eat out. We bought gifts and clothes from goodwill and consignment stores. We started shopping aldis-type store rather than krogers (not just cheaper, but fewer impulse buys and convenience foods).
With no change to our income, we were back on our feet within two years. And learned a valuable lesson.

OP, you can do this. if you are creative and very, very critical of your spending.
I agree with another poster: You need to work to RENT the business portion of the home. Shoot, give any renter a deal they can't pass up: Even a couple hundred dollars is more than you are making on it now, and they would pay the heat on that portion of the home to keep those pipes from freezing.
Cut, cut, cut your expenses. Be brutal about what you NEED and what you DON'T. Get down and dirty with the food budget, no convenience foods, focus on cheap and filling, etc.
Find part time jobs to increase your income (we didn't, mainly because of the kids), but this will speed up the process if you apply all of it to the debt repayment.

Good Luck.

 

[tzolkin]

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

I don't think they said they've "owned" the property for all that time.

My understanding from the second post was that they lived in the apartment (since 1998) and then purchased the building when the business closed. So that's why they have 20 years left on the mortgage.

 

[Procrastinate]

The other things I would suggest as far as the high utility bill is to ask if your electric company has budget billing. This would allow you to pay the same electric bill each month instead of high bills in some months and low bills in other months.

Also look at easy conservation projects you can do yourself such as caulking any leaks, unplugging a second refrigerator or freezer, and turning down the thermostat, especially at night or when you are not home. The ultimate fix might involve a new efficient gas furnace (if you have gas service) or more insulation, but I would try to get things under control before you take on more debt.

 

[eliza61]

The raise was recent, and our finances are just fine thanks for your concern, but I'll take note that I need permission before posting to a thread. Is there an entrance exam, or do I just ask your permission directly?

OP, I really hope you and your wife can figure out how to increase your income and live within your means. Paycheck to paycheck is stressful and no way to live.

lol,
I was going to ask you why in the heck you are explaining anything to a bunch of random strangers on this board. I find that if you dare to conduct your finances outside of what is deemed "the norm" here on the dis, you are evil and must be destroyed. lol,

How you conduct your financial life is none of their beeswax and you have as much right give advice as anyone else. until someone fesses up and revels they are Warren Buffet, I'm not impressed.

Carry on.

 

[NewRVLady]

lol,
I was going to ask you why in the heck you are explaining anything to a bunch of random strangers on this board. .

I was actually wondering about the 4000 sq feet-that is VERY large for a std home-glad they clarifies there is a store they have to sort of heat due to the pipes-what a mess!(could care less about income and raises! )