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Heres my situation, what should I do?

Date: Tue, 08/10/2010 - 20:15

Submitted by geo1nineteen
on Tue, 08/10/2010 - 20:15

Posts: 6 Credits: [Donate]

Total Replies: 16


Heres the status of my wife and I. We are current on all accounts but all are at limit or over limit. credit scores are about 720 and 703 respectively.


citi-$5030 payment due 9/3 min $125 my card
disc-$9900 payment due 8/26 min $220 wifes card
Line of credit-$24k due 8/28 min $469 joint account

2 cars that i owe on, sadly i have no equity so selling is not going to work since i cannot pay off if sold to release title to new owner. one vehicle may get traded in and downsized to cut payment while credit is still good. other vehicle was justpurchased.

My wife is co borrower for her sisters car,which is negative equity but current.

took a large pay cut and cannot afford to pay the unsecured anymore. quite frankly i am tired if it.

Settlement- i assume i need to let these become delinquent before i can settle.
bankruptcy- have thought of it but dont know if i would be able to purchase a house 12-18 months from now. ultimately i dont want to risk that purchase.

i have no savings, 401k, and checking never carries a steady balance.

if we did bankruptcy we both would have to do it due to the joint debt. I am trying to figure out a way to get account refinanced into her name and then her just claim bankruptcy. not sure how i can get away with the refi ifshe has no income. hell id be happy walking away with justy a $5k citi card.


i need some guidance.


Well, you probably need to stop thinking about a home purchase until you get this mess under control. With the cards at limit or over limit, you won't get financed. Your wife wont qualify for refi with no income either.

Settlement? Your creditors are going to see a recent car purchase and that is not going to sit well. Both Discover and Citibank like to sue so you have to watch your step. Any way you approach it, your credit is going to tank big time.

Wife needs to get a job to bring up the income. Second jobs for the both of you if necessary. You didnt get into this debt overnight and you cannot expect not to have to work had and sacrafice to get out of it.


lrhall41

Submitted by SOAPLADY on Wed, 08/11/2010 - 04:41

( Posts: 17315 | Credits: )


i have 2 small children and price of child care will exceed her income therefore it makes no sense.

i know i need to clear up the debt before i can buy a house. i just dont want to ruin that chance if i can help it

she is goign to talk with her grandmother to see if she can loan us money to be able to put a debt on holdand focus on others.

as said i am in good standings now BUT with recent job change that is going to tank quickly.


lrhall41

Submitted by geo1nineteen on Wed, 08/11/2010 - 13:55

( Posts: 6 | Credits: )


dear Geo,
Take if from me: At first I thought I was going to do a BK on our debt (long story) so I stopped making payments on our bills ....however, after reading about settlement and thinking about the consequenced (could lose home, cars etc, legal record etc), my husband and I decided to settle his debt and pay off mine with a loan from my mother. Even though I paid off my debt (significant amount), my FICO score is around 575.....and we don't even look at my husbands which went to 423 after not paying for 4 months. So if you stop paying, your credit will tank big time and probably stay that way for a minimum of 4-5 years...and it won't come off your credit report for 7 years. BK is 7 years for a chap 13 and 10 years for a chap 7. So, I agree with Soaplady....think about what you need to do to take care of what's in front of you and securing a good financial future for yourself and your family......We made significant cuts in our expenditures, saved our home and are happy with our decision. It will be a long debt free road, but we have learned! We had an 800 credit score when we bought our house 8 years ago.

Also, I do not know how the new car loan will affect the CCs willingness to settle......I would try to get some more opinions.....my husband ran up debt to save his business and they let us settle. Of course, they could see that we were really in trouble! Also, definitely think about selling the one car and buying a used vehicle. You have to severely cut your spending....look at everything...gargage sales....cutting cable...phone bills, grocery bills....can your wife take in a child or two and provide day care for extra money? Sorry to lecture...just been there and done that!!!


lrhall41

Submitted by on Wed, 08/11/2010 - 15:06

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we were looking to family to see if we could get a loan to pay it all off but its not looking promising.

since the majority is mutual debt i dont want to harm both of our credit with bankruptcy. we agreed to harm hers first before mine since i have the income. if it comes to that.

i spoke to a friend that did bankruptcy and just finalized in may. he just bought a car last week. at 13% but had no issues getting one. he had about $60k total with a vehicle. my worries are buying a house although i read that after 2 years you cannot be denied an fha loan due to bankruptcy.

heres my plan as of right now.

sell my car-if i can find buyer in reasonable time i will be ok. i have about $2k in negative equity but could likely come up with it. if not i would trade down and for what i could get i would cut $150-$200 from current payment. i also could work on refinance to secure vehicle but stretch term. that would be quickest releif and safest.

try to pay my credit card-I am going to be calling today to negotiate APR. 28% is ridic.

with the line of credit i am going to attempt to negotiate with the credit union. i have lengthy history with banking and financing. 2 motorcycles, 4 auto loans, personal loan in past. i have one auto loan with them but will change when i make vehicle change.

wifes card-this is at the bottom of the list. we are goign to try to negotiate this but likely goign to let it go and then settle. shes a cosigner for sisters car and on the line of credit with me so if they stay current and in good standing settling this will put a dent in score but wont ruin her.

expenses have been cut. i didnt upgrade cable or get internet (found unsecured wireless ;) ) making all meals.


lrhall41

Submitted by geo1nineteen on Mon, 08/16/2010 - 07:28

( Posts: 6 | Credits: )


I would forget about buying a house for the next few years. Focus on getting your finances in order then you can buy a house. Chances are you will not be approved for a mortgage now anyways.

There are 3 options 1) bankruptcy, 2) hardship program with your creditors - pay the full balance with lowered interest rates, 3) stop paying everything and attempt to settle balances at 30% to 50% on the dollar - you need cash to do this 3rd option

Banks usually won't help you until you are late 30 to 90 days.


Since you have good credit, you may try to get a bill consolidation or personal loan at a good interest rate for a 5 to 10 year term. This would be the best option to perserve your credit, if you can afford the payment and can actually pay back $40k.

Many are in your situation with the horrible economy. It isn't easy, but you can get through it. Good luck.


lrhall41

Submitted by on Mon, 08/16/2010 - 16:59

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Geo,
Be sure your wife understands that even one "settlement" will cost her dearly....and will put her in a "bad debt" basket.....not that it is the worst thing.....as My husband took the hit....we paid off my debt and settled his, but we both knew what we were getting into. He is unemployed and took early retirement....I have a professional job so it was more important for me to have better credit. Late payments (90+ days) and settlements really hurt your scores.....
as for the house, the advice above is correct....it is not that FHA wont approve you....but you can't find a lender (if that makes sense)......Loans are tight....may be different in 5 years and you are young enough to get your credit in order and then buy a house. Home ownership is Expensive!!! Get your financial ship in order!


lrhall41

Submitted by on Tue, 08/17/2010 - 07:27

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in her line of work?
Sounds like someone hoping someone will wave a magic wand to me. I only say this because I work 16 hours a day, 7 days a week at my job (lucky enough to have a good job that doesnt care how many hours I work as long as not over 16) but my wife took on 2 jobs to help clear our credit up and one is McDonalds ( definately not in her career field) its still another source of income and can pay 2 bills a month. We have 5 children ages 15, 10, 7, and twins that are 5. Instead of looking for family to give you handouts maybe you should worry about finding extra means of income and ask them to watch your kids, thats what we do. If your trying to get your life together and working hard to do it most people won't mind watching your kids vs. giving you money.


lrhall41

Submitted by on Tue, 08/17/2010 - 07:31

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I agree with the others. You are going to have to come with terms that your credit is going to tank. I know it sucks, I was worried about that too. I have had a credit card since college, I am 39 now and I had NEVER been late on my payments. Sometimes I lived month to month but I always paid my bills. We had some tough circumstances come up and things changed. But our credit was going to suffer one way or another. We just settled 4 cards, I am afraid to look at my credit but oh well. I understand that you need credit to get things like a house and a car if you don't pay cash but I also think the credit issue is a little overrated, especially after I hear Dave Ramsey talk about it.
Good luck with your decision!


lrhall41

Submitted by Jill Adams on Tue, 08/17/2010 - 09:46

( Posts: 96 | Credits: )


i listened to dave ramsey on XM yesterday. My family swears by him. I want to try his plan, but i am faced with the inability of even making minimum payments. I could make 1 more month if i borrow form my sons account. last thing i want to do. I wnt to sell my car but then i am faced with sharing with my wife which has proven difficult or buy a cheap one cash. well since i dont have cash to buy a cheap one i am stuck. just keep my car and make payments? try to refi my car for lower payments?
i thought going to NC would make things easier for myself and family. Since then i have taken a huge pay cut, and hell, i was fired on tuesday!

so now, unemployed, no friends or family around, i am faced with issues.

struggle here and do what i can?

move back to NY, get my job back, make $80k this year and let this be lesson learned and start a strict budget immediately? in NY my wife could easily go back to work and we have friends and family to help with kids. i ama sure 6 months of her working would help us immensely.

i think credit is overrated. do i just say screw credit and settle it all, save in the meantime, and once cleared and settled just focus on savings and deal with the issue of buying when the time comes? about 2 years?

which is better settlement or bankruptcy? i am sure with settlement it tanks the score but there is nothing there with the bakruptcy on it which is likely to make it better.

i have a few medical bills from my son that are in collections. one if them insurance was supposed to pay s my wife has been fighting that for 6 months.

last thing i want to do is ask a family member for any amount of cash.


lrhall41

Submitted by geo1nineteen on Thu, 08/19/2010 - 05:54

( Posts: 6 | Credits: )


If you stopped paying your citi card would you be able to save up 30% of the balance in the next 100-180 days? You most likely can get a 30% settlement with citi and in the meantime you can save, sell something, make extra money etc if it is doable for you. I don't have any experience with discover so I don't know what they are currently settling at but someone here will know or search the posts and see if it would be doable to save up for that settlement.

I am sorry about your job! Tough times right now and it is not fun.


lrhall41

Submitted by Jill Adams on Thu, 08/19/2010 - 09:51

( Posts: 96 | Credits: )


Forget about the house for now. By the way, FHA guidelines are 3 years from bankruptcy and your score has to meet the current 660 FICO min. Talk in the industry is that the score minimum may rise to 680 and the bk to 4 years starting in January. We'll see. They have been saying that for the last year but haven't actually done it yet. But it is not 2 years and besides most people can't rebuild their score to a 660 after only 2 years with a bk.

If you settled, your score starts coming back right away and there is no guidelines on wait times for mortgages. All balances are 0 so you are good to go.

But I don't recommend you buying a house until you have at least 6 months expenses in an emergency fund and your downpayment of 3.5% and your closing costs of about 3%. Owning a home is more expensive then people realize. They get in and then the following Saturday realize they dont have a lawnmower, rake or any tools to do basic maint.. The the toilet overflows etc etc. So make sure you have the money before you do it.


lrhall41

Submitted by Debt Free to Be on Fri, 08/20/2010 - 07:55

( Posts: 412 | Credits: )