What Options Should We Consider to Avoid Foreclosure? – Joshua

By Steve Rhode
Ask me your question.

“Dear Steve,

210,000 mortgage – 196,000 owed
4 months behind, foreclosure has not yet started but may within a month or so KS provides 120 days for the foreclosure process
15-20k unsecured credit debt/medical bills
My wife has 18k in student loan debt
2 cars, not behind on and I’m not certain how much equity really is in them but the debt is 20k 13k for the 05′ highlander, 6k for the 04′ impala
Lost my job 4 months ago
I make 1200 a month on unemployment
My wife makes maybe 800-1000 a month with her jobs.
3 children and on foodstamps.
Trying to find work and if I can find a job that pays 50-70k I’ll do whatever it takes to pay the debt.
No 401k or assets other than what is listed.
Applied for loan modification and BoA denied it.
House is an FHA 6% interest 30 year note. 1600/month payment.

What should I do? I’ve been told to consider bankruptcy, but I have no idea what is really best for us to do and what options we should honestly consider.

Joshua”

Dear Joshua,

This must certainly be an emotionally charged and stressful time for you. I’ve lived through that panic and fear myself and there is nothing fun about it.

While bankruptcy is a legal tool that is available to you it is probably not a reasonable expectation that it will allow you to keep the house. In a Chapter 13 bankruptcy you’d need to make at least the regular mortgage payment plus some to get caught up. I can’t see how the numbers would add up to allow you to do that and still get by.

But it would be worth finding a local bankruptcy attorney you like, schedule a free bankruptcy consultation and go talk to them.

Ultimately the first thing we need to focus on is replacement income. Unemployment is good but will not last forever. That is even more important than the house situation right now. Shelter situations can change and moving is a pain but being homeless sucks. After your unemployment benefits expire, unless you can find income, you could be on the street.

Just don’t let the mortgage situation distract you from the income issue. I know you are trying but it’s time to make a job of getting a job. You might even have to consider doing what I did when I found myself in that jam. I went and applied with every temp agency in my area, took every assignment they could send me on, and got to experience some horrible jobs. But I did them all with a smile on my face and grateful for any opportunity to earn money.

In the mean time, if you have some extra time on your hands, start going through your stuff at home and start throwing away anything you don’t need. It does not hurt to lighten the load now if you have to move latter.

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.

@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: What Options Should We Consider to Avoid Foreclosure? – Joshua

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