Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
A co-worker is considering Bankruptcy... He bought a home 18 months ago before selling his Condo and is now up-side-down on both homes and using Credit card advances to pay the mortgages to the tune of 20K
He would desperately like to keep his home and contacted the lender to request a delay or work-out 3 months ago. Lender said they only consider that option on loans 3 or more months in arrears and based on that he stopped making payments 3 months ago.
To make matters more complicated, the condo loan is in both his and his parents name and the condo title is in his name alone.
He and his wife have good jobs... they wouldn't be in this problem had they not bought the home without first selling the condo. Renting the condo has been a disaster and many of the neighboring condos are now bank owned or for sale.
I cautioned him 18 months ago about buying prior to selling... anyway this is where they are today.
He asked me for advice again and I'm not at all qualified... any suggestions???
Cut all other expenses and shovel himself out of debt? Sell off his car[s] and take public transportation. Shop for groceries at the $0.99 store. Buy essentials/clothing/furniture at the thrift store. Work overtime. Put his family on a strict $200/week budget. Stop dining out. Cancel cable/telephone/internet subscriptions or cut service back to the basic level. Sell unused items on Ebay. Take a second job. Work weekends. Turn down the heat. Unplug appliances when they're not in use. Cancel all memberships with clubs/etc. Stop drinking alcohol (expensive!). Buy CF bulbs. Turn down the water heater. Take shorter showers. Shred credit cards, pay only in cash from the weekly budget. Use checks, direct draw, or debit cards only for bills.
Maybe it's a little old-fashioned for today's world, but that's what I do when I need to get out of debt.
Cut all other expenses and shovel himself out of debt? Sell off his car[s] and take public transportation. Shop for groceries at the $0.99 store. Buy essentials/clothing/furniture at the thrift store. Work overtime. Put his family on a strict $200/week budget. Stop dining out. Cancel cable/telephone/internet subscriptions or cut service back to the basic level. Sell unused items on Ebay. Take a second job. Work weekends. Turn down the heat. Unplug appliances when they're not in use. Cancel all memberships with clubs/etc. Stop drinking alcohol (expensive!). Buy CF bulbs. Turn down the water heater. Take shorter showers. Shred credit cards, pay only in cash from the weekly budget. Use checks, direct draw, or debit cards only for bills.
Maybe it's a little old-fashioned for today's world, but that's what I do when I need to get out of debt.
I agree... but I don't think it's going to happen. They are young and I think there is a real possibility of a Bankruptcy/Walk Away or going back to their home country...
They were hoping to refinance to a fixed rate loan... but I think the chances of that happening are nil...
That's a pity. The bank really should recognize when people are trying to make an honest effort to pay off their obligations (re-fi). They're shooting themselves in the foot by forcing people into forclosure. At the same time, the people need to show some serious effort to meet their financial obligations.
Buying or selling a house (regardless of the market) should not drive you into bankruptcy, especially if you "make good money." There's just no excuse for that, other than your own financial planning irresponsibility.
Ah well, I sound like a broken record. I've been saying the same thing since 2004. The only difference is that now the chickens are coming home to roost.
Even if he declares bankruptcy, the condo loan is still in his parents name as well, and they will then become responsible for the mortgage. Bankruptcy will help him, but not his parents.
As Silverfall stated, his parents will still be responsible for the loan on the condo and that is an unfortunate situation for them. I hope he's discussing what he's thinking with his parents so they are prepared for what comes their way.
I remember how excited he was 18 months ago to buy their "Family" home and be out of the condo from his bachelor days.
They had a hard time qualifying for the home because he still had the condo mortgage... eventually, they were able to find a broker and get a ridiculously low first year rate on an ARM, although, they had to pay 3 points to get it.
They did have some interest in the Condo when they first listed it, but, all of the offers would have netted a deal that would have cost them a couple grand to make the sale and the wife was upset because they had spent a lot of money on improvement and upgrades
6 months ago, the rate on the home reset significantly higher and the condo rate had a slight up tick too and the condo is now worth about 40k less than they owe...
I did suggest taking in room mates... lots of them... hey, everyone in my family had too the first couple of years when they first bought.
In retrospect... you could say they took a gamble and lost...
I guess they could walk away from their Home and go back to the condo and thus keep his Mom (Dad has since passed) out of the BK thing...
I remember how excited he was 18 months ago to buy their "Family" home and be out of the condo from his bachelor days.
They had a hard time qualifying for the home because he still had the condo mortgage... eventually, they were able to find a broker and get a ridiculously low first year rate on an ARM, although, they had to pay 3 points to get it.
They did have some interest in the Condo when they first listed it, but, all of the offers would have netted a deal that would have cost them a couple grand to make the sale and the wife was upset because they had spent a lot of money on improvement and upgrades
6 months ago, the rate on the home reset significantly higher and the condo rate had a slight up tick too and the condo is now worth about 40k less than they owe...
I did suggest taking in room mates... lots of them... hey, everyone in my family had too the first couple of years when they first bought.
In retrospect... you could say they took a gamble and lost...
I guess they could walk away from their Home and go back to the condo and thus keep his Mom (Dad has since passed) out of the BK thing...
I think they should walk from the home and go back to the condo..not fair to put their mom in that situation...because of their poor decisions. I can tell you from experience that buying before selling can just about bite you in the a** if you are not careful...when we bought this place 3 years ago, we were trying to sell our home in NorCal, it was at the beginning of the downturn. It turned out ok for us, but in this market I would never buy before selling, no no no. We had a home we were really interested in, and just found out it had an offer on it..nothing we can do, must not be meant to be. Anyway, if i had the choice of BK or walking, I would walk from the home.
Have they heard of the HopeNow project. They are counselors that can help give options. They may even be able to talk to the lender on their behalf and strike a deal.
The short sale may work too!
Last edited by cpowers21; 03-08-2008 at 08:14 PM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
