I Have No Savings and Have to Juggle Payments Each Month. – Butch

“Dear Steve,

I am 64 years old, a teacher. Every year, my salary has gone done (forced furlough days). Bad divorce-impulsively took a second mortgage on my townhome to pay child support and attorney fees (13.9%!). Currently in a DMP program for $22000 of credit card debt. Retire in 2 years-will get 50% of current salary and Social Security. First mortgage modified by Chase at 4.5%. Second mortgage is a 15 year balloon.House severely upside down (first mtg-$97000, second mtg. $32000), house appraisal $66000. DMP program runs through March of 2017.

I need a place to live, but feel like I’m throwing money away every month on a townhome that is worthless. Citimortgage refuses to modify my loan in any way. Says I don’t qualify because I’m not behind on payments. How could I qualify for a modification through Chase on my first, but not on my second? Aren’t the guidelines the same? I have no savings and juggle payments each month to stay current. What should I do?


Hello Butch,

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

surpriseHow much is your monthly house payment in relation to what you could rent an apartment in the area for?

I would recommend that you meet with a bankruptcy attorney to discuss some options.

If you feel that you need to get out from under the home because the payments are drowning you, a chapter 7 could be an option to allow you to get free from the house and get a fresh start to immediately start saving as much as you can before retirement comes along.

If you feel the need to keep the home or it possibly makes financial sense, you might want to explore a chapter 13. It essentially works like the DMP you are on now, but with one potentially major benefit, you may be able to strip the second mortgage from the house.

So I would recommend you find a local bankruptcy attorney using the resource section at the top right of this site and discuss some further options to see if they might make good sense for you.

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