My Debt Scares Me And Keeps Me Up At Night. – Lee

“Dear Steve,

It’s about 6 am already – been awake since midnight after a couple of hours of sleep. I am in such a frightening situation and it’s all because of our financial crisis. To top it all off, we recently had a flood in our basement which doesnt help much.

We are in danger of foreclosure. Lived in our home almost 5 years. Our situation is slightly different that what most are going through now. Four years ago, my husband’s mother decided to sell her franchise (a place he had been working for 13 years and making decent money, decent to the tune of $104K a year). She sold the franchise to my husband’s supposed friend, with the stipulation that this friend not touch his salary or benefits. This ‘friend’ knocked his salary down to $17K a year and canceled the health and life insurance.

He did not want to worry me, so what did he do? He over compensated using his credit cards. Our mortgage is $2K a month. He finally left the job and was able to collect unemployment. He was working 13-14 hour days Monday through Friday and on Saturday 10 hours a day. I was at home with two in diapers and would be hard pressed to find employment around those hours.

The day after he left that job, I took a job. It was now me working 13-14 hour days and I’d come home and the place would look to be in shambles.. Every room in the house was messy and in complete chaos.

After 4 months of working, the company I was employed with (I was in sales, and putting at least 5 miles a day on my feet) lost some key client accounts and I was told I’d have to go door to door in sales which I felt was not a safe job for a lady. I ended up leaving that job, and then tried to sell the Kirby Vaccuum which was not something I wanted to stay with. Towards the end of my 15 demos (2 hour demos) I had gotten another call for work with a printing company. $10 an hour Monday through Friday so I took the job. I worked from January 2009 until August when I was laid off for not selling enough.

All the while, my husband was collecting unemployment and I was making roughly $400 a week.. and would hand my money over to him to help with the mortgage and the bills. When I started working, we were already 2 months behind in the mortgage.

To make a long story short, In November of 2009 I scraped together $800 to pay a loan modification company because they promised us they could help us..especially since our 80/20 split mortgage interest rates are at 7.35% and 12.35%… they were certain they could help. They instructed us to not pay our mortgage and if our mortgage company were to call, to refer them over to the modification place directly. Three months went by and we were told they were not successful. They kept the $800 and thereafter, I called my friend who is an attorney. He suggested we deal directly with the bank. So I called the bank. They did not want to speak with me because I am not on the note.. only on the Deed.. but basically said that since we were just turned down we’d have to wait 45 day to re-apply. On the 45th day I was on the phone with them.

Again, they gave me a hard time for the reason I stated above, but finally put me on hold and came back a while later to say they’d set up a forbearance plan. Instead of the $2K a month mortgage we could sent them $1428.11 for the months of March, April and May. .. and that by the end of May they will have conducted their review. So we went for it. We paid the March bill the end of February. A week after getting the payment, the bank sent us a letter declining us for a modification. Well, we continued to pay April, May, June and also July. In August, my husband’s unemployment had an interruption and even though I gave him my income from the job, he did not pay August of 09. This started the foreclosure process up again. I was devastated. Our mini van payment, alone, is $555 a month and we live in NJ. So the car insurance is about 1800 a year.

I was contacting whomever I could for advice and/or help. I even went to the congressman’s office and sat there for 2 hours only to speak with a rep who said he’s just telling everyone to squat in their homes and not to leave. That was the advice I was given.

My one friend said she knew of another modification company that she believe would be able to help. Since I already lived through the nightmare of the first one, I was apprehensive about seeking help from yet another modification company. Well, even when I contacted these folks, I told them my story. They replied they had a good rapor with IndyMac Bank and they could definitely help us. My husband borrowed $950 from his mother to pay these people in September of 09.

Again, the same instructions.. to field all calls over to them from our mortgage company. We provided paperwork/documents you name it. The second week of January 2010 the mortgage modification company notified us that IndyMac has told them they cannot help us. The reason they could not help is because apparently there is a private investor on our mortgage…and this investor is not part of Obama’s plan… A private investor??? I’m thinking who is it – some guy named John out in Indiana?? We were then instructed to fax over a written request for disclosure of the private investor. Last Monday we received a letter from IndyMac that the private investor is none other than Wells Fargo.

In the meanwhile, we’re behind on the water bill, the electric, and the car payment is over a grand past due.

My unemployment is about to run out..and my husband is now in training for a job. I cannot sleep, I”m not eating right and I”m wanting to go to sleep and not wake up.

To top it all off, we get numerous calls throughout the day from bill collectors – It’s gotten so bad that I just shut the phone off.

I had one credit card with Wamu – that my husband also used.. that is now (because of interest and late payments over $4K) – allbeit my credit limit was only $2500.

My husband? has about 8 or 9 credit cards… all completely maxed out.

I am dreading the fact that it’s very possible a sheriff will be coming to our door to evict us. I have my 4 and 6 year old that I have to take care of and I just dont know how we can get out of this financial hole.

I’d really like to know what you believe to be our best options.


Dear Lee,

I’m so sorry to hear about the stress and misery you are living through right now. I think all of us that have been in similar stressful debt situations can feel the pain. Best word to describe it, sucks.

Let’s push all the other distractions aside for a moment and start at the foundation. This situation can be repaired but you will first need some income coming in to pay for your day-to-day living expenses, forget the debt.

Once you’ve got that covered then you need to click here to find a local bankruptcy attorney and go talk to them. Bankruptcy will give you legal protection from your creditors, make the collection calls have to stop, and give you a fresh start.

You might even need to give the house back to the bank and wiped out your residual debt in the bankruptcy if you don’t have any equity in it.

By jumping back to square one and starting over you can make every day from there on out, better. There is no sense being slowly dragged under, kicking and screaming, when from what you’ve described there is no reasonable expectation you will bring in enough money to repay your debt and get caught up with the mortgage.

Once you decide to move ahead with bankruptcy the collector calls don’t matter any more. You can answer them or not. The debts will be discharged in your bankruptcy.

You sound like a sensitive soul. You need to understand the collectors are not judging you. If they get stern with you or say things that make you feel judged, they are only doing that because it is an effective tool to manipulate you. The collector has so many accounts to deal with they don’t have enough time in a day to judge anyone.

Before you make any rash judgments about bankruptcy, you really need to make a free appointment and sit down with a bankruptcy lawyer and have a chat about your specific situation.

But I would bet that the moment you decide that’s the path for you then you’ll feel like a weight has been lifted off of you, because for the first time, you will actually see a light at the end of the tunnel.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
Damon Day - Pro Debt Coach

5 thoughts on “My Debt Scares Me And Keeps Me Up At Night. – Lee”

  1. Thank you both for your suggestions.. what I would like to know is how is it possible that the ‘private investor’ named, Wells Fargo, is not part of Obama’s plan? It makes no sense. I am pretty sure with this new job training, my husband will be making adequate money again to be able to pay for the mortgage. I’ve looked into renting and have to say that the price to rent is near what it is to own. We have a little boy and a little girl, so a 2 bedroom wouldnt really cut it unless I had two boys or two girls. Either way rental places are anywhere from $1600 on up. What I dont understand and cannot comprehend is why the current interest rates of 7.35% and 12.35% is not perceived as too high. If modifications are designed to help homeowners, surely lowering the interest rate would certainly help. Why is IndyMac refusing to help? Our combined total monthly income at this point is $3926.00 but I am hoping that if my husband gets hired it will increase. As far as a legal jugment is concerned, my husband has already been served and his bank account has been attached. He no longer has use of his account. So, if we must file for Chapter 13, and could possibly do that, why would we also have to give up our home? I’m sorry I dont understand all of the nuances but I really believe IndyMac and/or Wells Fargo should give us a break.. afterall, they’ve been given one.

    Anyway, all I can do now is say prayers that things work out for this family. I thank you very much for your input and suggestions.
    .-= Lee´s last blog ..Podcasting Possibilities… =-.

    • Lee,

      So here is the problem, it is a process that you have no control over. Even with loans that are eligible for modification, only 7% receive a meaningful and long-term modification that reduces the cost of the mortgage to allow someone to stay.

      Nobody, especially those loan modification companies tat took your money, is going to force any lender to do anything their process does not allow for. It’s not personal, it’s a process.

      If you need to speak to someone regarding your specific mortgage situations, contact a free housing counselor.

      The problem moving forward is going to be finding a way to bring your loan current and avoid foreclosure. The only legal way you have to stop a sale and prevent the lender from foreclosing will be to look at bankruptcy. Under bankruptcy you will have to make your regular mortgage payment plus an additional amount each month to bring the loan current. It does not sound like you can afford that in your current situation.

      I did not think you could do that so that’s why I suggested you talk to the bankruptcy attorney about handing the house back and starting over without having to make up the shortfall.

      I read what Tom said but we’ve got to be honest about the statistical likelihood of a modification in time to prevent foreclosure, and it’s not good.

      You know, you can talk to a bankruptcy attorney, get informed, and get educated about bankruptcy. Go talk to a bankruptcy lawyer and come back and let me know how it went before you rush to make any other choice that might leave you stuck in the same situation with less time. The path you’ve been on isn’t working. We need to change the path.


  2. My advice conflicts with Steve’s somewhat. While I agree with the importance of trying to increase your income, I suggest you avoid bankruptcy and no longer talk with collection agents.
    You can consider bankruptcy if, and after, one of your creditors serves you with a lawsuit.
    In the meantime, continue to work with your loan servicer directly on loan workout solutions. Your lender IndyMac was taken over by the FDIC and resold to OneWest Bank in March 2009. They are busy ramping and staffing up to handle to loan of troubled loans. All loan servicers are coming under inreased political scrutiny and pressure to work with borrowers. So hang in there; things will improve.
    Whatever you do, don’t leave your home early, even after a possible foreclosure. Stay rent/mortgage free as long as possible and save the money!

  3. Thank you very much Steve for replying so quickly.. and, thank you, again, for understanding the gravity of the situation this family is in. We have discussed bankruptcy as our only last ditch option, however, the cost to do bankruptcy is over $3K which is not an easy amount to come up with.

    From what we were told, filing Chapter 13, would stop the foreclosure and the debt collectors. It will also require us to pay the current amount of the mortgage which is $2K a month and on top of that, the months in arrears would be factored in ontop of that amount. What I would like to have happen, should we find we’re able to do bankruptcy, is that the interest rate of 7.35% on the first loan as well as the 12.35% on the second be reduced. I do not know why we are locked into this percentage when the solicitations we receive about modifications claim they can reduce the interest to as low as 2%. I do not expect ours to be reduced quite that low, but the current rate is just unreasonable, given our changed circumstances with income.

    I will keep you posted as to how things go, and I appreciate your offer to help this family.
    .-= Lee´s last blog ..Podcasting Possibilities… =-.

    • Lee,

      When you go talk to the bankruptcy attorney, do so with an open mind and everything on the table. Don’t box yourself in by saying “we absolutely must keep the house.” It just might be you can’t afford it right now and will have to look for alternatives, like renting till you recover.



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