Financial nightmare UPDATE!!!!!!

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.
 
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.
 
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.
 
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.
 


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.
 
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...
 
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.
 


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.
 
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:
 
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).
 
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!
 
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.
 
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.
 
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!
 

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