Posted: Sun Jan 27, 2008 11:19 pm Post subject: In a Bind, and Need Help
Hi all,
I've just recently found this very helpful site, and have looked and read through the forums. I think I have a good idea of what I need to do, but wanted to present my problem,and get your feedback:
My domestic partner and I have sat down to look at our finances, and we are in a pretty desperate situation:
1. 1st Mortgage at $460k
2nd Mortgage at $80k
home is about $500k (unofficial guesstimate)
so home is 40k loss of value currently
total monthly mortgage is $4100
2. Domestic partner has been laid off 3 times in the past couple of years, and finished paying off a bankruptcy filed about 3 years ago. In order to pay that, and a couple of credit cards, we had to take out the 2nd. Then with the job situation, we've had to do more cash advances, and slippery slope into about $90k in credit card debt.
So, we are currently about negative $3k per month with all our bills, and we do not have anymore credit cards to tap into. We do not know what else to do, except file for bankruptcy. But, even then, with a $4100 mortgage, we'd only have about $100 free after necessities, and that's if I get approved for a chp. 7. If chp. 13, then there'd be nothing.
From what I've gathered from my reading, here's what I think I should do:
1. Contact both my 1st and 2nd mortgage lenders, and tell them my situation to see if they can do anything.
2. File for Chapter 7 bankruptcy for the credit cards.
And, if my morgatgers can't do anything, the best thing would be, I see, is to sell the house (however we need to, short sale, foreclosure, deed in lieu), so we can have some breathing room.
We want to keep the house as much as possible as our lives revolve around our 5 year kid. And his life is rooted in the city we live in.
It's good to see you sharing your problems so freely with this community.
Since your are already out of chapter 13 (I suppose), therefore once again it's better not to file bnkruptcy. Instead, you can go for debtconsolidation of your credit cards.
As for mortgages, you may take out a refinance loan combining both the balances but your home value isn't that much. So, it's better to talk to the lenders and find out if they can suspend the payments for a while. In the meantime, you may be able to gather some extra cash through your savings and other assets. _________________ Procrastination is the enemy of your financial sucess
Posted: Mon Jan 28, 2008 1:23 am Post subject: RE: pay off credit card debts and home loans
Hi Sanfran,
What I can interpret from your post is that, your balances on the first and second loans are $ 460K and $ 80K respectively. that adds up to $540K which is higher than the expected value of your home. But I still feel, you should get the home value verified through an appraisal or you can even get an idea at what price currently homes in your neighborhood are being sold. This will help you to roughly estimate the home value, though I still believe an appraisal is a better approach.
Since your second mortgage balance isn't much, therefore I shall suggest that you refinance the first loan and do a cash-out so that you can pay off the second. This is a good time for refinance as rates are pretty low now. It is true that you'll have to pay some cash towards closing but I think it is worth going for.
Alternatively, if possible, you can refinance the first and pull out cash to pay off the second loan as well as the cc debts, then that's even better. But for that you need to talk to your lender first and find out if he can offer you a refinance loan.
Hope I could help you. In case you wish to discuss further, please feel free to do so.
sanfran8910
