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What Can I Do to Keep From Losing Everything?

“Dear Steve,

I am a single mother of 3. I have a mortgage, a car payment and about 15,000 dollars of credit cards bills. I have recently taken a significant loss in income due to loss of a 2nd job and loss of childs support. I have some equity in my home which out weighs my credit card debt. I have recently fallen behind in my payments for just about everything. I have called a consumer counsler which suggested that I do a debt relief plan. That would only save me 100 dollars per month. I can not qualify for bankruptcy because I have equity, I can not refinance because my credit score has dropped. I have contacted my mortgage company about loan modification but that is at least 90 days if I qualify. I can only survive about 30 more days before I lose everything!!!

What can I do to keep from losing everything I own, getting sued or getting my wages garnished? Is there any help for people like me?”

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The Answer

Your question is one I’m often asked.

First, we need to look at the basic building blocks here. Before your loss of income you were able to support your lifestyle based on a previous level of income. By your own admission, that does not exist anymore.

The formula for determining financial success is easy Income – Expenses – Savings = Disposable Income.

In your situation it’s not the formula that needs to change but the Expenses variable. You need to adjust your life expenses to now fit inside your current income. Since the income has been reduced, so must your lifestyle. Alternatively, increase your income to compensate for the loss.

If you are now at the end of your rope and can’t hold on any longer, you will need to take drastic and swift action. The first consideration would be to fire sale the house to get a quick buyer and get out some of your equity if you can. And right about now you’ll probably be saying “there is no way I’m selling my house.” My response, don’t sell it and risk losing it and all your equity. It’s your gamble, your call. You don’t have to do a damn thing if you don’t want to.

You could always go for a Chapter 13 bankruptcy and while that would allow you to keep the house, I doubt it would provide you with significant relief since $15,000 in credit card debt is only about $300 a month in payments. You could always hand the car back and stick the remaining debt in the Chapter 13 bankruptcy but then how are you going to get back and forth to work? If you could afford to pay $2,000 for a beater you could buy some cheap wheels for basic transportation. It’s an option.

But I would bet your mortgage is your largest expense. And by making one change, selling the house you can’t afford, you could get this equation to balance again.

Outside of that, any miracle quick fix is going to most likely be a scam in the making. Desperate people make horrible decisions and pursue magic sales pitches over reality.

This is your time to be in control and take action or do nothing and wait for your creditors to take action against you.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

What Can I Do to Keep From Losing Everything?
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Shivaff8

    Thank you very much for your time and information,I’m glad I found your site.These situations can get overwhelming,and not knowing where to even get information can be paralyzing.Thanks again

  • Steve Rhode

    Two mainstream solutions come to mind. She could try eloan.com or LendingClub.com. LendingClub.com is a peer-to-peer network that cuts out the banks so the rates can be lower.

  • Shivaff8

    Other than voluntary repossession,are there any reputable companies with whom she could try to refinance?

  • Steve Rhode

    There are no government programs to assist with car loans. There are companies out there that advertise they can modify a car loan but the BBB has sent out a warning and the ones I’ve investigated have been shutdown or are dubious.

    She might have to hand the car back and then based on her situation, consider bankruptcy to discharge the big bill that will be due from the car and whatever other debt she has so she can get a fresh start.

  • Shivaff8

    I have heard of programs that help people with refinancing or lowering interest rates on their mortgages if they can prove the expenses are more than they can handle.
    Do you know if there are any similar programs for car loans.
    I have a friend who’s a single mother and is in desperate financial need,can no longer afford her car payments while providing for herself and daughter,but owes so much on her car that she can’t trade it in without getting into a bigger payment

  • Shivaff8

    I have heard of programs that help people with refinancing or lowering interest rates on their mortgages if they can prove the expenses are more than they can handle.
    Do you know if there are any similar programs for car loans.
    I have a friend who’s a single mother and is in desperate financial need,can no longer afford her car payments while providing for herself and daughter,but owes so much on her car that she can’t trade it in without getting into a bigger payment

    • http://GetOutOfDebt.org Steve Rhode

      There are no government programs to assist with car loans. There are companies out there that advertise they can modify a car loan but the BBB has sent out a warning and the ones I’ve investigated have been shutdown or are dubious.

      She might have to hand the car back and then based on her situation, consider bankruptcy to discharge the big bill that will be due from the car and whatever other debt she has so she can get a fresh start.

      • Shivaff8

        Other than voluntary repossession,are there any reputable companies with whom she could try to refinance?

      • http://GetOutOfDebt.org Steve Rhode

        Two mainstream solutions come to mind. She could try eloan.com or LendingClub.com. LendingClub.com is a peer-to-peer network that cuts out the banks so the rates can be lower.

      • Shivaff8

        Thank you very much for your time and information,I’m glad I found your site.These situations can get overwhelming,and not knowing where to even get information can be paralyzing.Thanks again

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