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Old 01-30-2014, 12:23 PM
 
Location: Charlton, MA
1,395 posts, read 5,068,783 times
Reputation: 855

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So I actually sat down and did a little bit of research and figured out a few things. The only have 1 mortgage. I initially thought they had 2. The mortgage matures in just 3 years, BUT it has a balloon rider on it. They have been aware of this all along. It's my understanding that they took out a 15 yr loan with a 30 year payment schedule. So whereas there payment might have been set at only $560 they pay $1050 per month. I don't know if they have been paying extra like that since the beginning? I know my mom was super mad when she found out the thing had a balloon to start with at the closing. It was their intention to always pay extra on it and I believe that they did. I hope so because if not in 3 years they're going to get a surprise bill.

I figured out that the balloon payment would be about $70k if they didn't pay any extra over the term of the loan. I would think with the house and the amount of property that they own (he bought several nearby lots in tax sales) they would at the very least break even if not make a little bit of profit if they were to sell the house.

I was surprised they only had 3 years left on their mortgage. For some reason I wasn't expecting that. I feel a little better knowing that they aren't actually underwater on the mortgage.

Oh and we're not talking about rich people here at all. I would be very surprised if they could get $100k for the house and property. He bought in a neighborhood where there are a lot of mobile homes. Not well kept ones either. He had a dream to build his own home and he did while living in a mobile home. He financed his dream by paying for materials with a credit card. It's really quite a crazy thing.

His income is social security and a small pension. A figure of $600 was mentioned. I'm not sure if that's the combination of the pension and SS or just the pension. Mom is receiving SS as well and she works as a hair stylist. Makes her own hours which is nice and takes off when she wants to. It's a hard job physically with all the standing, but she's her own boss and that's nice for her. She loves what she does and it's not really a hardship that she's not able to "retire". I don't know what she would do with herself if she did.
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Old 01-30-2014, 05:24 PM
 
Location: Wisconsin
25,591 posts, read 56,250,866 times
Reputation: 23251
You need to know, exactly:

Monthly income for both
Actual mortgage balance
Required monthly payment (not the double payments they've been making)

Sounds like, between them, their income is somewhere in the area of $1,200-$1,500/mo.??

If they've been making extra payments off and on for 12 years, the mortgage balance should not be all that high.

Example:

$100k @ 5% for 30 years - $536.82, balance $76,357;
$100k @ 5% paying $924.82 for 12 years, balance 0.

Actually, a low mortgage balance could be a double-edged sword. Depending on SC law, they could lose their house in the bankruptcy if there is too much equity. In WI, one can file bankruptcy and still keep $40k equity in the home. Credit card and other debts can be wiped. No one around here is forced to sell personal possessions, although if there were a lot of vehicles, jewelry, etc. w/value, they might need to be sold.

Mortgage lenders will often reaffirm loans even if one goes through bankruptcy. Then, assuming they can keep the house, when the loan balloons in three years, lender should be able to restructure the loan to an even more affordable payment. So, they might be able to keep the house in spite of the bankruptcy.

Also, you say step-dad lost his job. Has he filed for unemployment benefits? He should do that. He might get a few bucks. His pension would probably reduce his benefits - i.e., be a dollar for dollar offset - but possibly not eliminate the benefits entirely. All depends on the amount of pension/unemployment benefit. SS benefits are not offsets to UE benefits (with the exception of IL, LA, VA, possibly SD).
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Old 01-30-2014, 05:45 PM
 
Location: OCNJ and or lower Florida keys
814 posts, read 2,033,327 times
Reputation: 842
This might sound kinda crazy but I wouldn't give a damn about the bills and debts. I make it my number one priority to go find some medical help for Dad and some counseling suport advice for Mom. Considering their income/debt level I would think someone n the local government could help. In my neck of the woods we have a agency called COSA. COmmunity Services for the Aging. I have seen COSA get involved with a local low income family and they put the alzehiemers mom in a nursing home. They helped the dad cope with the stress and paid for his monthly housing expenses.
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Old 01-30-2014, 06:03 PM
 
Location: Baltimore, MD
5,288 posts, read 5,953,721 times
Reputation: 10803
I found a nice outline from the Charleston Bar that summarizes asset protection in SC.

Based on what you've posted thus far, it looks like your mother will come out o.k. The house is probably protected (from the credit card debts), as are the retirement funds. Furthermore, in general, creditors cannot recoup debts from the non-debtor spouse. Wages cannot be garnished in South Carolina (who knew?!)

If they can't afford to pay their mortgage, even if Husband stops making payment towards credit cards, is it possible for Husband to sell at least one of the lots he purchased separately from the homestead?

Your mom and her Husband look like they will come out o.k., even if they do not choose to pursue bankruptcy. Just sit tight and continue to encourage your mother to speak with a consumer or bankruptcy attorney. Heck, they may qualify for help through the local Legal Aid office or another low income legal assistance organization.

BTW, did you post because you were worried or because your mother was worried? Just wondering.
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Old 01-31-2014, 09:29 AM
 
Location: Charlton, MA
1,395 posts, read 5,068,783 times
Reputation: 855
I posted because I wanted to give her some good advice to be able to give her. I'm not especially worried because they are adults and they'll do whatever it is they want to do no matter what I suggest. So far it seems that my suggestions are shot down. To the pp that suggested filing for unemployment. I did mention that to my Mom as well. I am worried about how this is affecting my Mom, but it's kinda hard to care when they don't care enough to help themselves. I am kinda just done right at the moment. We'll see what happens.
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Old 02-01-2014, 11:07 AM
mlb
 
Location: North Monterey County
4,971 posts, read 4,423,511 times
Reputation: 7903
What kind of health insurance do they have?

I would suggest a full workup on your dad, too - you may be worrying about nothing in that area as well... just because there's fear doesn't mean there's illness.

Anxiety can play hell on your health - but if solutions are found - perhaps he will feel better.
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Old 02-01-2014, 11:20 AM
 
13,721 posts, read 19,125,165 times
Reputation: 16970
I agree with bankruptcy. I wouldn't recommend that for a younger couple with the ability to work and pay off their debt, but your mom and her husband should be retired. File bankruptcy and get out from under the financial stress (and creditors can't touch their Social Security), and then they need to get to a doctor and find out what is going on with the husband. I agree that it sounds like dementia of some type.
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