Will Appreciate Any Information

[B12]

Oh, I am getting old. My intention to responding to this thread was to say, Please do not lead the agent on and tell them you changed your mind. Tell them up front what you need. Keep calling until you find one that will help.

[B12]

Sorry to disagree about that "professional" appraisal. There are 3 ways to appraise a house depending on why you need the appraisal. The only way to appraise it for resale value is to establish "market value" and a real estate agent or broker will do one for you for free.

Call one and tell them what you need. They might charge a nominal fee, but normally will do it for free especially if you tell them you will consider using them to sell when you do one day.

[JRScott]

The OP mentioned he might be willing to get another job. Can you reasonably work 2 full time jobs?

With a 26k debt that's probably 780 minimum payments a month (minimum payments are usually 3%). If you could get another job full time and make say 20k more a year, that would boost you to 49k income each year. Doing that for 2 years you probably could pay off the entire debt. However it is only feasible if you are healthy and can maintain it.

What you'd do is arrange the credit card bills after all other obligations and list them from the smallest to the largest. Called a debt snowball what you would do is apply minimum payments to all but the lowest one. Apply the most you can to it while still paying minimums to the others. Then once it is paid off, pay off the next smallest debt and so on. You have to be very careful during the time to not take on more debt.

The reason you go from smallest to largest is so that you can see progress made.

If you don't think you could work 2 full time jobs then I'd go talk to some bk attorneys and see what they think they can exempt. Be honest about your home and everything. If they don't think they could protect it, then you might consider a mortgage to pay off the credit cards. Just be sure to cancel the credit cards after paying them this way.

[HHM]

I'm not sure I'd mortgage your house. Turning unsecured debt into secured debt is not always a good thing to do. The only way it can work is if you cancel all the credit cards after you use the mortgage to pay them off, otherwise you'll end up like my buddy who within 2 years had all his cards maxed out again.

I would consult with 3-4 lawyers in your area and see what they think is your best option.

Do you have any secured debt? (Like a car etc)

I generaly agree with you...but if he cannot exempt the full amount of his home equity, he really has no other choice.

[JRScott]

I'm not sure I'd mortgage your house. Turning unsecured debt into secured debt is not always a good thing to do. The only way it can work is if you cancel all the credit cards after you use the mortgage to pay them off, otherwise you'll end up like my buddy who within 2 years had all his cards maxed out again.

I would consult with 3-4 lawyers in your area and see what they think is your best option.

Do you have any secured debt? (Like a car etc)

[HHM]

Yeah, you are one of those debtors that faces a difficult problem because the two goals you need to achieve

1. Keep the house
2. Eliminate your debt

Since its very possible your equity in the home exceeds the state allowed exemption, BK may not be your best option.

Just to put some numbers out there (note, I am guessing to some degree)
$26,000 debt, avg interest of 11%, with a minimum payment of 2%
That would make your minimum payment (at the outset), $520 per month (note, that amount is probably 30% of your monthly take home pay, which is ALOT)

If you were able to consistently pay $520 per month, it would take you 5.6 years to pay that balance down. Assuming you made no new charges and the interest rate does not vary.

If you are payment sensitive, and I HATE TO RECOMMEND THIS, but you may want to consider mortgaging the house...maybe not for all the debt, but at least for some of the debt to lower the overall cost of the debt to you.

However, if the ownership history on the house is in good order, you really should consider filing chapter 7. At the very least, start taking some action. Go to the county recorders office and get a copy of the deed. Schedule some free consults with attorney's in your area (see at least 3 attorneys) and find out their recommendations. Be proactive.

[harry49]

I appreciate the advice of all of you. I don't want to live the remainder of my life under the weight of irretrievable debt. My credit rating is 750 (last quarterly report) because 2 1/2 years ago my cc debt was only around 5k. I lost my job to downsizing, spent the better part of a year caring for my dying mother, then had trouble finding a job. In the meantime I had an accident, with $10k in medical bills insurance would not pay and developed a gambling habit, and lost about 5k to that. It's all been downhill for 2 1/2 years. What you all have helped me with is an understanding of how to start thinking about bankruptcy, if it comes down to that. I appreciate it.

[SinkingFast]

I am worried about declaring bankruptcy and then not being able to access any credit if I have an emergency. Right now, my credit rating is 750 even though I have all this debt. I have never missed a payment and have only been late a couple times. The problem is, without savings, I'm going in the wrong direction.

Harry, dear,.......... You're 57 years old. And have a fabulous credit history if that score you posted is even half way accurate. Chances are good that if you do file BK, you'll recover very quickly.

We were 49 and 50 when we filed. 26 years of very good credit history. Owned several homes in several different States. All paid for. No Foreclosures. No repos either. All car loans paid in full.

We got Credit offers immediately after we filed. We even accepted a CC before Discharge fully expecting it to take a while to process. It didn't. Cards came immediately. We waited until after Discharge to activate the cards.

Crunch the numbers. Look at your options. If you can get a 2nd job and pay off your debt in a reasonable amount of time, then that may be the way for you to go.

Do not fear filing BK because of your Credit. As HHM said,........ A proper paper trail on the house is a bigger concern than getting Credit post BK.

[harry49]

To tell you the truth, my intention is not to declare bankruptcy unless I have no alternative. I may just try to work more and pay the debt down over time. I understand 28k per year will not pay down 26k in debt. I need to work a 2nd job for a couple years and pay it down.

I have no reserves. I am worried about declaring bankruptcy and then not being able to access any credit if I have an emergency. Right now, my credit rating is 750 even though I have all this debt. I have never missed a payment and have only been late a couple times. The problem is, without savings, I'm going in the wrong direction.

[JollyGG]

What if the house were no longer part in my name? Or is it too late for that?

Pretty much to late for that. At this point it would be considered a fraudulent transfer to an insider if you signed it over to someone else. Now, keep in mind, we are not saying that you can't keep the house, or that you can't declare bankruptcy. We just want you to be aware that with equity in a house that excedes your state exemptions there are certain risks.
An experience bankruptcy lawyer would know more about how homes such as yours are usually handled by your trustee's. Schedule appointments with 3 or 4 and see what they say.

[harry49]

What if the house were no longer part in my name? Or is it too late for that?

[HHM]

The shared ownership is tricky...assuming their is a good paper trail, i.e. Will (or probate) and the deed has been updated to reflect all owners, then you will probably be ok, as your share (the share the trustee would be entitled too) would probably be exempt.

However, if there is not a good paper trail, or the deed does not reflect all the owners (or has been recorded incorrectly) a BK could be very problematic.

Do you think your siblings would allow you take out a mortgage on the house to cover your debt? Normally, I would not recommend making unsecured debt, secured debt, but you may have to if BK would not work.

[lrprn]

lrprn, if you read his post, you will see that his home is in Illinois, not Missouri.

Obviously I was having a "senior moment" when I posted my reply....looking back I have no idea how I got the idea that harry49 lived in Missouri.....my mistake....sorry about that. However, given that Illinois is a state that can't take the federal exemptions either, looks like I was only partially grazed by the 'stupid' bullet! lol!

Either way, $15k vs. $20k....after closing costs and realtor commission, he should be ok.

Yep, I agree that when adding on closing and commission *PLUS* a really bad sellers market at the moment, harry should be ok keeping his house if he files. Just he should expect that the trustee is going to want him to pony up the $5-7,500 difference to keep it.

Harry49, to find out about what your house is worth on the local market, contact several realtor companies in your area and tell them you are investigating whether selling your home is a good idea or not. Have them come out and walk through the property and tell you (1) what they think it's really worth, and (2) how much you can price it at in today's market. You really want to know (1). Afterwards if they contact you, just say you changed your mind and are not going to sell now. It's a quick and fast way to get an idea of what your house is REALLY worth.

What you DON'T want to use is the county tax appraiser's estimate of your home's value. These are routinely over-estimated to get as much tax money from you as possible!

The only way to get a TRUE estimate of the home's worth is to have the home professionally appraised. That costs several hundred dollars, but might be worth it if the result saves you thousands paid to your trustee because of an over-valued home.

[Boscoe]

lrprn, if you read his post, you will see that his home is in Illinois, not Missouri. Where I live, we can do either Fed or state - my error for not reading his state first.

Either way, $15k vs. $20k....after closing costs and realtor commission, he should be ok.

[JollyGG]

I am deffinately not sugessting any one course of action here I am just throwing some options out there.

What would you siblings think of selling the house. With your portion of the equity you could pay of a large part of your debt (or settle with the companies and pay it all off - though not good for your credit and has some tax consequeces). You could then rent for a while.