Not yet delinquent, but probably very soon....
Date: Fri, 06/22/2007 - 02:55
Anyway, the point of this is that I need advice as to what to do next. I have about a week and a half to two weeks before I start going delinquent on accounts and it will probably only get worse until my house finally sells.... I've consistently lowered the price on my house so it is cheaper than any others in the area and I'm barely making enough profit to pay off the debts I've raked up. I can't get a HELOC to go through since it is listed for sale....
I guess my question is, is it possible to find some kind of debt consolidation plan that works with low credit scores? I have quite a few student loans (now two loans consolidated by federal or private) and almost all of my credit cards are very near their limit. Both of these factors lower my score to about a 559 even though I've never missed a payment on anything in my life so far. I know that I need to go to court to try to get my alimony adjusted as I simply can't afford it; however, attorneys cost money that I don't yet have as well - that's a different issue for now though.
I guess I'm wondering if it's better to try one of the two following options:
A) To see if I can afford a consolidation loan and find a way to get one somehow?
B) Taking a hit on the credit report and trying to get my debts reduced and settled?
To give you a ratio of my bad debt (credit cards) it is about 50% of my current annual income (which when we move out west my income is likely to drop about 25-30%).
If I do consolidate my loans is there any idea how much you generally save each month as a percentage or does it just vary by each situation?
If I try to get my credit reduced and settled will it affect the profits from the sale of my house (whenever it happens) or could I use the little profit from my house sale to put as a down payment on another house (and in turn lower my monthly expenses making it possible to live out west)?
Thanks in advance and sorry for all the questions. I've never had credit problems before and am still frustrated that it has come to this in spite of all the years I've tried to be good at managing my funds.
I have always been in favor of settling and eliminating debt. C
I have always been in favor of settling and eliminating debt. Consolidation can help some but it mostly just shifts the debt around and sometimes creates more debt in fees. One of my favorite quotes is ???????It is impossible to borrow your way out of debt.???????
One thing I am confused about is why the heck are you paying alimony. I thought alimony had been eliminated in almost every state. Maybe you are confusing it with child support. I would try to get completely out of alimony if you can.
I would continue to reduce the price on the empty house until it sells. I do not know the particulars of your house loan but lets pretend like you paid 100,000 and you have had the loan for only 3 years at 7% on a 30 year loan. After doing the math I show a payment of 665/month with 565 in interest and 100 principal. This means every month you sit on the house you lose 565 dollars. That means in a year you will lose 7000 to the bank not to mention taxes, insurance and upkeep. You can multiply these numbers by 1.5 if you borrowed 150,000 or 2 if you borrowed 200,000 and so on.
Thanks - a quick answer
Thanks for the advice, and actually I've reduced the house more than 10,000 since I listed it and been putting constant work into making it look even better. Apparently Maryland is a very slow market in my area right now (go figure).
As to alimony it's a very long history and story, but I'm definitely trying to get it revised as soon as I can afford to.
Thanks for the suggestion on eliminating the debt - I think I'm definitely leaning that way right now....
Sorry about the guest comment....
I thought I was still logged in and didn't realize my session had timed out. I apologize for any annoyance.
I know you did not mention car payments but cars are a great pla
I know you did not mention car payments but cars are a great place to reduce debt for some people. If you have expensive cars with expensive car payments you might consider selling them and trying to buy a couple used cheap cars out of the paper from individuals for around 1,000 bucks each. I know it sucks to move down in cars but it is a great way to save money.
I realy do not believe in car payments. The average american family has an average car payment of 400 per month over 5 years. That means they buy a 20,000 dollar car and pay for it over 5 years which cost about 25,000 after interest. At the end of 5 years that car is probably worth 5,000 resulting in a loss of 20,000. In three of those payments you can buy a cheap grocery getter to get you buy and save the other 57 months minus repairs. That would save you 23,000 plus interest on your money as opposed to losing 20,000.
I bought a 1994 z28 camaro in 2000 for 3,000 that had about 15k miles on it and I am still driving it today. I have put about 2,500 in repairs over time including 2 sets of tires and a complete overhaul on the electric system. That means for less than 1 years payments I drove for 7 years. Be cautions on what you buy though and make sure it is in decent mechanical condition. Even if you can get it to last you a year without repairs you still come out ahead by about 4,000 compared to the car payment example.