I am in a situation that I need good sound advice about. I am 39 years old and permanently disabled, having become so in 2002. I receive Social Security benefits monthly. I have a caregiver who permanently lives with and cares for me. His only income is from the state for providing my care. We both have unsecured debt only totalling together about $57,000.00. His is at $21,000. and mine is at $36,000.00. We have accrued this debt over a 4 year period of time. My monthly income is $1025.00 and his is $1024.00.
We applied for a home equity loan this March with our bank since it was the place we could afford. The house is clear and free and has been so for years. We both had very good credit. We just received our third denial letter a few weeks ago. The bank and their financial institution were both unable to get us approved for a loan. We were applying for a home equity loan for a $550.00 a month. We were using all of our checks just to pay our bills each month. Every letter says we don’t have enough income and have too much debt accrued over a short period of time.
We have been taking cash advances from our bank on our joint checking account and from a check cashing place to make it through the month waiting on the loan process and to also keep our bills paid. That was a huge mistake. It only made our situation worse and deepened how short we are each month. Last month my whole check didn’t cover advance repayments.
Starting in August we began missing payments. We have spoken to some of our creditors. We set up payment plans with some but that has been difficult and we have been late. Others suggest going online to helpwithmycredit.org. I read your article about that. We don’t really know whether to trust debt management programs or not.
We contacted a bankruptcy lawyer and that is not an option because I added my caregiver onto my house deed within the last two years not knowing that would be a problem in bankruptcy court. We did not expect to be unable to pay our bills like millions of other folks out there. We didn’t even pay our utilities last month.
We have no family or friends to borrow from. I’m the only one with a car and it is 13 years old. It has had more work done on it than it should have and is below Blue Book value. Our furniture is at least 20 years old and we have no valuables to sell. The house is below the value I alone am allowed for an excemption I believe. I don’t know what joint tenancy does in the State of CA. The bankruptcy attorney said to try to work with the credit card companies and if that didn’t work we would probably have liens on the house that would have to be dealt with when the deed was changed or the house sold.
We do not like owing anyone. We are trying as best as we can. We realize we have a problem and are not hiding from it or any of our creditors. We did not go on a good time spending spree. This is making physically sick, more than usual. My caregiver cannot leave me alone to find work. That is the point of him being here – without him I would have to live in a nursing home since I cannot cook, clean, bathe or do other necesseties for myself. It has made him feel miserable as well. We are trying, we are. I had to pay $550. in cash advances this month so at least I had some of my check. What is your advice? Thank you.
Your situation sounded a bit odd to me so I ran it past an attorney friend, FBC, who you see commenting here on the site.
On face value it looked like the addition to the deed of your caregiver was the issue but that can certainly be explained.
Here is what FBC had to offer:
It sounds to me like the bankruptcy attorney was concerned about the transfer of the property interest in the home to a potential insider.
HOWEVER, I can’t see how that could be a problem, UNLESS the debtor lives in a state where the state has opted out of the federal exemptions and are so low that the home would not be fully exempt. (For example, Missouri springs to mind — I believe their homestead exemption is limited to $7.500. By contrast, in Oklahoma where I practice, just across the state line, homesteads are 100% exempt in most circumstances.)
The writer says that his home was free and clear of all liens; that’s what makes me think that the value of the equity in the home is such and the state exemption is such, that the debtor stands to lose his property. See link to state’s that have opted out of the federal exemptions. In some cases (like Oklahoma, where the state law exemptions are more generous than the federal ones) this is a good thing. In others like Missouri, quite a bad one for debtors.
Either way, I would strongly advise Dorothy to seek a second opinion. It could be that the first attorney did not understand some key fact. Or it could be that he misunderstood something. Attorneys sometimes disagree about the application of the law. I argue constantly with one of my good friends and colleagues in my own firm. Lay people often mistakenly believe the law is cut-and-dried, and often enough it simply isn’t.
So Dorothy, there you go. I agree with FCB that a second opinion is the best next step for you to take.
What we know for certain is that without the protection of bankruptcy you may be forced to sell the house to take care of these debts that are building each month. If you are now piling on cash advance or payday loan debts then we have real problems brewing.
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.
P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.