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My cousin and his wife are in dire straights and have come to me for help. I would recommend the debt snowball to them, but they have some problems we have to find solutions to first in order for that to work. Here is a brief overview of their biggest problem.
They got an ARM for a house 180k house, not sure interest rate, but there payment was $1,600/m. The ARM has adjusted and now there payment is $2,500/m and climbing. They are unable to refinance as there credit score is horrible (they should have not been given a home loan in the first place). They also don't qualify to have their loan renegotiated under the governments troubled homeowners assistance program (apparently it only helps some people). Aside from us (my parents and I) buying there home, I see no way out of it for them (we will not be doing this for too many reasons to list). The bank recommend "a short sale" on the property, but if that happens won't they be liable for the difference between what is owed and the sale price? They have looked into bankruptcy and have been told that they do not qualify for chapter 7, because their income is too high. They have been advised against chapter 13 because it will not fix the house problem. They cannot stay in the house because they cannot afford the payments and will be evicted in not too many months. What would be the best way ... err least costly way for them to get out from the house. Credit score is not a concern as it has be thrashed trying to keep the house, think lower high risk score.
There are many other issues that need to be addressed, but it is fair to say the has to be figured out first. Thanks in advance.
They got an ARM for a house 180k house, not sure interest rate, but there payment was $1,600/m. The ARM has adjusted and now there payment is $2,500/m and climbing. They are unable to refinance as there credit score is horrible (they should have not been given a home loan in the first place). They also don't qualify to have their loan renegotiated under the governments troubled homeowners assistance program (apparently it only helps some people). Aside from us (my parents and I) buying there home, I see no way out of it for them (we will not be doing this for too many reasons to list). The bank recommend "a short sale" on the property, but if that happens won't they be liable for the difference between what is owed and the sale price? They have looked into bankruptcy and have been told that they do not qualify for chapter 7, because their income is too high. They have been advised against chapter 13 because it will not fix the house problem. They cannot stay in the house because they cannot afford the payments and will be evicted in not too many months. What would be the best way ... err least costly way for them to get out from the house. Credit score is not a concern as it has be thrashed trying to keep the house, think lower high risk score.
There are many other issues that need to be addressed, but it is fair to say the has to be figured out first. Thanks in advance.
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