Need advice for my mom
Date: Sat, 03/14/2009 - 21:38
My mom has accrued significant debt due tot he failure of her business. She has about 130K in unsecured credit card debt that she is personally liable for. My parents have a house that appraises at 625K but hasn't sold after being listed for 550K for several months now. The house has 340K in mortgages.
She was considering bankruptcy for a while. She was hopeful she could sell the house and negotiate the debt with the proceeds and still keep a chunk of the money for my folks to buy a downsized home.
Since the house hasn't sold she is worried that she will get sued by the credit card companies and they will put a lien on the house.
Her new plan is to get a reverse mortgage. She says she can get a reverse mortgage that will give her 30K in a line of credit in case of emergency and reduce their monthly payment from about 2400K/mnth to about 1100K/mnth. She wants to pay the interest on the thing for a couple of years and then hopefully they can sell it if the market improves.
They are both about 70 and the house is their only asset. Between retirement and social security they bring in about 5K/mnth. If one were to pass the other would get about half that.
I worry that the interest will eat up any equity and that the rates will go up dramatically once the inevitable inflation that follows large governement debt kicks in.
What says the group: Is this a good plan or shoudl they just declare bankruptcy?
Thanks to all who consider this and offer their thoughts!
She was considering bankruptcy for a while. She was hopeful she could sell the house and negotiate the debt with the proceeds and still keep a chunk of the money for my folks to buy a downsized home.
Since the house hasn't sold she is worried that she will get sued by the credit card companies and they will put a lien on the house.
Her new plan is to get a reverse mortgage. She says she can get a reverse mortgage that will give her 30K in a line of credit in case of emergency and reduce their monthly payment from about 2400K/mnth to about 1100K/mnth. She wants to pay the interest on the thing for a couple of years and then hopefully they can sell it if the market improves.
They are both about 70 and the house is their only asset. Between retirement and social security they bring in about 5K/mnth. If one were to pass the other would get about half that.
I worry that the interest will eat up any equity and that the rates will go up dramatically once the inevitable inflation that follows large governement debt kicks in.
What says the group: Is this a good plan or shoudl they just declare bankruptcy?
Thanks to all who consider this and offer their thoughts!
I don't really know alot about the reverse mortgages so I really
I don't really know alot about the reverse mortgages so I really can't say much. My only advice is to make sure if they do go with this plan of action that they know and understand the terms of the loan. Unfortunately, there are many people out there that are waiting to prey on people like your parents and will take advantage of them. I wish you and your parents luck. Let us know how you make out.
I'm sorry. I thought I posted a reply to this earlier. Fil
I'm sorry. I thought I posted a reply to this earlier.
File bankruptcy and then look into a reverse mortgage. Reverse mortgages do not go by credit guidelines so they can began the process of a reverse mortgage one day after the bankruptcy has discharged.