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Lost a Job and Trying to Pay the Bills. Should We Refinance? – Jenna

“Dear Steve,

Our problems started 7 years ago when our daughter was born, her medical issues, then my husband lost one job (he was working two, to pay medical bills) we were doing pretty well until he got laid off in March.

We went from $4,000 a month to a little over $2,000. I got a job driving for our local school , so some to add to that, like $900.

We have credit card issues now because we got behind, and I thought paying our house, and car pmt were more important. We are looking into refiancing the house, taking out money to pay off a couple of the outstanding bills.

I try and pay a little on these as we go but, they’re telling me their sending my accounts to Collections. I’m afraid their going to sue me.

Does this sound like a good idea? and if so, What happens when I try to pay the ones in collections?

Jenna”

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The Answer

Dear Jenna,

OK, I can help you get through this but I need a bit more information first. Just post your answers in the comments section below.

You mentioned a refi to take cash out. How much equity do you have in your house?

What is the approximate mortgage balance and current value?

What state do you live in?

How much credit card debt do you have?

Big Hug!

Lost a Job and Trying to Pay the Bills. Should We Refinance?   Jenna
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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.
  • Jennifer

    Hi Steve,

    Here are my answers:

    We are approved for a loan of 110,000

    The balance on the mortage is 63,000

    We live in PA

    Approx 12,000

    Any info would be greatly appreciated. 

    -Jennifer

    • http://GetOutOfDebt.org Steve Rhode

      The good news is that you live in PA which is one of the few states where your wages can’t be garnished.

      My ONLY concern about the loan idea is if it leaves you in a worse financial position where you will be struggling to pay the new mortgage. In that case it can lead to you losing the house.

      If you think a consolidation loan is the answer let’s look at an unsecured debt consolidation loan first where you are not putting your house at risk. I recommend LendingClub.com and in fact I help fund loans there as well.

      Does that seem like a reasonable first step before risking the house?

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