Sell House to Pay Debt?

[jIM_Ohio]

Sure, it feels a little odd putting all this sensitive information online but I pasted it below. I hope this site is secure and anonymous


Loan #1 - $4,607.43
Loan #2 - $27,510.15
Loan #3 - $940.15
Loan #4 - $31,863.98 (when I typed up my list of debts, I miscategorized this one, this is a 0% loan from a family member. Loan #2 and #3 are loans from a business associate. In my last post, I had this loan down as CC #18 but it is really a loan, not a credit card)


CC #1 - $1,215.61
CC #2 - $6,171.74
CC #3 - $8,499.98
CC #4 - $141.82
CC #5 - $933.15
CC #6 - $7,213.61
CC #7 - $810.12
CC #8 - $662.49
CC #9 - $12,482.08
CC #10 - $4,083.40
CC #11 - $1,251.57
CC #12 - $6,432.39
CC #13 - $3,624.58
CC #14 - $8,668.37
CC #15 - $3,569.23
CC #16 - $11,142.17
CC #17 - $11,346.00
CC #19 - $3,399.29

A few other things to note, some of the payments are negotiated and and for every card that is over 14% I call every 3 months and try to get the interest down. Many have accommodated, but you can see a bunch are still really high. In the 2.5 years we have been paying off debt, we have eliminated about $52K. We were over $200K when we started

My plan is to eliminate all cards under $500 first to get rid of the little payments and then attack the rest from highest interest first. As mentioned, I am only able to pay about $100 more than what my minimums are so it's slow going. However, some of the minimums are negotiated minimums so they are flat amounts that are much higher than what a normal credit card minimum would be.

My reasoning for thinking about selling the house is that I could wipe out $20K in debt or so and that would free up more money to concentrate on the debt that is left behind. I would continue to pay the same amount ($4500) every month to get rid of it.

Bills 4-5-7-8 should be paid off within a month. Skip a month paying the high interest bills and get those low principal debts paid off within 1 month.

If you have $4500/mo going to debt repayment, I would look at every debt less than $4500 and see if you can pay it off in full in one month, then pay minimums on the other debts. If the minimums are too high, do the following:

1) pay off balances of the low bills (loan 3, cc 4-5-7-8)
2) document with photo copies of the checks you paid the balance in full
3) call the creditors up of every other card. Tell them you want your interest rate locked and are willing to discuss a repayment plan. If they do not meet your terms, move them to bottom of the list. Continue focusing on the low balance debts each month.
4) Call the other creditors back and try again to lower interest rate- tell them you will only pay the debt back if they lock in interest rate, and because you have 23 debts, the creditors which lock in first get their money first. Play hardball and remind them you are not obligated to pay them back, and your credit is already shot, they cannot do anything to you that you have not already done to yourself. Tell them you are even selling your house so there is no house to take away.

**note** if you are delinquent the creditors might start writing off your debt, meaning if you owe them $10,000 and you pay then $5000, they might have already written the $10k off, so its very possible they will work with you if they know they will get something.

They key is if they give you a hard time, just stop paying that debt for 2-3 months (get their attention) and pay off other debts (not just the minimums, make it a point to pay one debt in full each month and document you did so, and show this to the creditors, or tell them on the phone when they call you).

Remind them if you move, you might not give them your new phone number, so its in their best interest to work with you now, cut you a break and they will get their money.

[graceful]

Expenses

Mortgage (taxes, escrow, insurance) - $714.50
Car Payment - $262.75
Car Insurance - $95.75
Gas and Electtric - $84
Water and Sewer - $35.00
Comcast - $94.53 (cable and Internet, necessity for work)
Verizon - $23.60
Groceries/Household - $500.00 (includes groceries and all household expenses)
Gas - $100.00
Day Care - $1076.80

I'm not going to address the debt re-payment because I think others have already given advice on that. Kudos for honoring your commitments. It's a hard sacrifice but based on what you have accomplished so far, you can do it and emerge stronger on the other side.

I agree with DS to cut the cable altogether. Do it now because you will be doing it anyway when you move. Many programs are available on-line nowadays. My girls like to watch Phineas & Ferb on Youtube before it even gets on the Disney Channel. Sometimes they even watch it in French or Spanish because apparently, those counties air the shows sooner. Lol.

We did not install cable at our new house. Between Netflix ($9) and internet ($29.95) we have MORE programing that we have time to watch. Netflix has a ton of free instant streaming programing and if we really needed to tighten our belts further, that would get canceled.

How much longer on your car loan and what kind of insurance is currently on it? I would do research on getting that 2nd hand car to replace it to see if it make sense. It may not totally on the car side. BUT you may find out that it might on the insurance side. If you can buy the car in full, you can just carry liability insurance which may be a substantial difference.

Again, I would work the numbers and see. I would even check car dealerships if they will take your current car as a trade-in for a used car. If the savings were minimal and your loan length isn't that much longer AND your car is reliable, I, personally, may suck it up and keep it. Only because my fear would be that I would have to sink $ into the beater car for repairs that would negate any savings I got for trading down. Now if you already have an unreliable car that needs frequent work then like the house, trade it down for sure.

If your can't afford to keep maintaining your house, definitely try to sell it. Whether or not you CAN sell it, is the question. Prepare to do it anyway asap but be prepared that it may take a while. Start DECLUTTERING your house now. Sell, donate, or use up everything now. It may generate some extra $ to throw at the debt. It will definitely help the house show better. Also, it will cut the costs of the move, once you do sell. Eat up everything in your pantry, use up all stock piled toiletries. If you aren't going to eat or use them now then you never will and it is time to purge.

I wish you the BEST of luck. You can and will do it. Wishing that this happens for you sooner rather than later!!

[GiantRobo]

Quick question to those of you streaming your TV from the Internet. We tried the basic Netflix account so we could stream stuff, the problem is, they don't stream it with subtitles. My wife is partially deaf and needs the subtitles to watch most things. Are subtitles an option on Internet streaming?

[disneysteve]

Quick question to those of you streaming your TV from the Internet. We tried the basic Netflix account so we could stream stuff, the problem is, they don't stream it with subtitles. My wife is partially deaf and needs the subtitles to watch most things. Are subtitles an option on Internet streaming?

Great question. I just checked Hulu and CBS and their videos don't seem to have closed captioning. The two shows I checked on ABC did have them. So it probably varies from show to show and source to source.

[wincrasher]

I'll be a contrary voice in this crowd.

I doubt you will find a decent place for you and your young boys to live for less than the $700 that your mortgage is. They will also probably run a credit check that you will not impress them.

Also, it sounds like everyone is a higher priority than your boys. In the end, everyone will get their money plus lots of interest and you'll have nothing saved for their futures.

I'd consider defaulting on the loans to relatives and business assoicates. They chose to invest in your business, but have borne no risk. If not default, I would defer until you get your other affairs in order.

Bankruptcy is also an option. You would have to go Chapter 11 since you have income, but you'd get a re-org plan with payment to most. The damage is great, but it's not forever - you can go FHA on a new home in about 3 years.

[jpg7n16]

I'll be a contrary voice in this crowd.

I doubt you will find a decent place for you and your young boys to live for less than the $700 that your mortgage is. They will also probably run a credit check that you will not impress them.

Also, it sounds like everyone is a higher priority than your boys. In the end, everyone will get their money plus lots of interest and you'll have nothing saved for their futures.

I'd consider defaulting on the loans to relatives and business assoicates. They chose to invest in your business, but have borne no risk. If not default, I would defer until you get your other affairs in order.

Bankruptcy is also an option. You would have to go Chapter 11 since you have income, but you'd get a re-org plan with payment to most. The damage is great, but it's not forever - you can go FHA on a new home in about 3 years.

Whoa what??? bankruptcy for this? they have a good income, are making more than the minimum payments - so are nowhere near in need of debt relief, and have assets to spare. Bankruptcy would be foolish and uncalled for.

And a chapter 11 will just put you on a repayment plan - which is what they're on now without the trashing their credit part.

Applying $30k to these 20% and up loans and credit cards would save over 6000-8500 per year - in just interest. If they move to a place even for $900, that only raises the living expense by 2400 for the year, for a net gain of at least 3600/year on the switch alone (aka 300 a month). They'd have to move up in rent to $1200/month before break even on the switch.


I disagree with just oh so much of what you've written in this post.

[GiantRobo]

I'll be a contrary voice in this crowd.

I doubt you will find a decent place for you and your young boys to live for less than the $700 that your mortgage is. They will also probably run a credit check that you will not impress them.

Also, it sounds like everyone is a higher priority than your boys. In the end, everyone will get their money plus lots of interest and you'll have nothing saved for their futures.

My boys are my #1 priority. Fortunately, they are pretty young, 2 and 4, so I have time to save up for their futures. However, I can't do that until I get out from under this debt. I am not willing to default or file bankruptcy at this time. I believe I can get it paid off, just trying to find the best way to do it.

You are right that the one issue we haven't really figured out is whether I can find a place I can afford. I think I can but I obviously don't know that for sure. I am doing what research I can but who knows how long it will take to sell the house if we go that route.

[Lindahfx]

Are you able to find cheaper daycare? Is there anyway to get your parents or neighbours to care for the children, at least part time? You are paying over $1000 a month towards care that you could use to pay off debts.

[GiantRobo]

Yeah, daycare is a real killer but I don't know what to do about it. We only send them to day care twice a week during the summer and 3 times a week during the rest of the year. The other 2-3 days we have family watch them but we don't have anyone else available on the days we have to send them. The place we send them is average for this area.

[jIM_Ohio]

Are you able to find cheaper daycare? Is there anyway to get your parents or neighbours to care for the children, at least part time? You are paying over $1000 a month towards care that you could use to pay off debts.

If family stuck them with debt, would you really want those people helping to raise your children? LOL

[GiantRobo]

Haha, well luckily we do have some family we can rely on for sitters, just not enough to cover the whole week.