3 1/2 yrs divorced, had stellar credit, (lowest score was 794) bought condo just before market peak and put $45k cash down, salary has continually decreased since by 10% total in addition to losing bonuses, paid expenses, and 401k, work hours also have shortened and are unpredictable. $10,000+ in assessments since house purchase, condo dues have more than doubled in cost, health insurance cost has doubled, multiple health problems are additional uncovered costs plus prevent me from seeking 2nd job, thousands in emergency vet bills, and my boyfriend who moved in to help me with expenses had been laid off.
I reviewed finances and realized I really couldn’t afford the condo with the increases, assessments and decreased pay, so I took $28,000 HELOC loan to improve unit to the standard others were competing at and sell, but could not finish upgrades (due to all emergency expenses and improperly done work that had to be done twice), then economy crashed.
My house is now worth 100,000 less than at assessment for HELOC, Someone walked on $22,000 owed to me (with no legal recourse), and used ALL of my savings and eventually all but $300 (just to keep it open) of my 401k to keep paying medical expenses, bills, mortgages and monthly expenses which now exceed my monthly income.
I have also sold some personal items to make the bills each month, and am out of options. I can’t even sell my car for what I owe on it and get a cheaper one. 6 months ago, I investigated credit consolidation (would have cost me a lot more), bankruptcy(would have to qualify the hard way, and I wasn’t comfortable just tanking my debt), and debt settIement (seemed mostly scams), so I followed the advice that credit companies will deal with you personally to work something out.
I spoke with one cc company and entered into a 6 month temporary plan which was supposed to revert to my 8% rate after the 6 months and remain open. After receiving the paperwork, it stated my card would be closed. I called immediately to cancel the program and they said it was a few days after my reg. payment would have been due and it was too late to get out of now. I stated those weren’t the terms I agreed to and readily offered to make the payment plus late fee to the card and was told too bad, I was stuck in the program and because I was such a long time excellent customer I would be offered the reactivation later. I was, but at a higher rate due to the econ. crash. My balance on this card is $23,000, so I declined the percentage rate and opted to continue paying off the card at the lower rate with the account closed.
The same day I called that card and made the original arrangement, I called the co. I had 2 smaller amounts with to discuss a similar temporary plan. The person was aggressive and combative, cutting me off after barking questions at me and yelling at me. I could tell they were looking at my perfect credit report and felt that I didn’t need help. They stated they would rather I file bankruptcy rather than work any payment arrangement out of any sort and kept launching accusations and misstating what I had told them. I was told if I didn’t shut up and not say another word they could make it so I could never get through to another person at the company ever. They were still yelling so I hung up and called back and found that both of my accounts with the company had been closed by that rep.
I briefly described how I was treated to the rep that answered the 2nd call and they very nicely told me how to insist I get a supervisor on the line to correct the situation. Unfortunately the next person I got connected me via 3-way with the original rep stating the orig. rep was the supervisor who stated, no I could not talk to anyone above them. The supervisor refused to reopen either account until they were under half the limit and recommended I transfer some of the balance to a different card.
Well those three cards were the only ones I had, and one was in case of emergency and one was my overdraft protection account. (I had no gas cards or store ccards.) So I had to apply for a new cc with a different co. for a small amount and transferred what I could to open one of the accounts, only to find out that they still weren’t going to open either one again because of my debt to income ratio. This left me with NO emergency credit at all and no overdraft protection either. This is still true.
This was an absolutely horrible experience from an honest attempt at responsibly trying to deal with increased debt and reduced income without ruining my credit or jacking up my interest rates. I had been dumping hundreds and sometimes a few thousand at a time on this debt to try to bring it down and realized I couldn’t and would be unable to continue paying so much each month. I have never had so many catastrophic events at once and I have never, ever carried such cc debt.
I have never missed a payment or made a late payment EVER and I try to pay as much over the minimum as I can. But I don’t know how many more personal items I have worth anything to make up the money I am short each month, I can’t increase my income in any way, and I don’t know what to do. I feel like I can’t ask advice from anyone because financial planners and bank employees and credit counseling agencies and lawyers all have an a vested interest in a particular outcome. I am afraid to just short sell or foreclose the house because that $45k I put into it is the only money I might ever recover.
I don’t know whether to try bankruptcy (I don’t automatically qualify), consolidate my cc debt ($32k), short sell or foreclose my house or try to renegotiate with the cc companies. I put $45k cash into the house, have a $135k mortgage and $28k heloc on a house currently worth about $110k if I am lucky, with unfinished renovations, reduced income, and a car I owe more on than it’s worth at the moment. I have drained all of my savings and retirement trying to pay off my debt. What are my best options?
Wow, thanks for the detail. I don’t think you need to admit defeat. But I do think you need to admit reality.
People don’t believe me when I say that one of the hardest problems debtor’s have to face is getting their creditors to accept fair and reasonable repayment plans and that creditors often promote bankruptcy. Sadly, your case is another in that long line of being treated poorly by your creditors.
You’ve walked down this long dusty road and along the way you’ve shed assets and things you could sell to make the journey into this financial desert. I’m certainly not going to lecture or scold you for what you have done. I know it felt like the right thing, the responsible thing to do at the time.
Ultimately I can see from your story that your goal was to honor your promises and emerge out the other side of this unexpected financial mess.
The original plan isn’t working. In hindsight it would have been great if you have not touched the 401k and left those funds protected from the creditors. Cashing out that account only eliminated your retirement fund without an expectation of actually resolving the problem.
My primary concern now is that you have cashed out and sold anything of value that’s not nailed down, and you have no savings account or cash to fall back on. I think you need to reboot your financial life under the protections of bankruptcy.
Bankruptcy is the only legally binding debt solution in America that will allow you to either repay what you can afford based on your income, or discharge your debt and start over. If there was some other debt solution that gave you some legal protection, I’d tell you about it. There isn’t.
I’m not going to take a stab if you should or should not keep the condo. I think that is a discussion you should have with a bankruptcy attorney.
But I do want you to approach this bankruptcy process with you in mind. Call at least three office, and ask for a free bankruptcy consultation appointment so you can come in and discuss your situation. After making those three calls, decide which office treated you the nicest and seem to be the most understanding and compassionate. This isn’t going to be a tough technical process and you deserve to be treated with compassion and respect at this hour of great emotional pain.
I really want you to give me an update on your progress and what you decide to do, because I care.