Thread: Debt Negotiation - Advice NEEDED quick!

hey guys, new to this... but same old story i have read on here. debt is out of control. current income will not dig me out.

some background.

i work commission based and have seen my better days. wife is stay at home mom with newborn but may go back to teaching in september.

i owe $465k on my house. it is worth anywhere from $465k to $500k. mortgage (6%) and taxes = $3500 per month

credit card debt is problem. owe about $96k total (28k amex, 27k citicard, 25k AAA, 16k credit union card). all maxed out.

i also owe about a bunch of money to family.

i have been current to this point but my income has taken a hit.

my plan is to see what my mortgage company (hudson city) will do for me. i have been current so i am thinking forbearance for a bit? also, i am incapable of paying my credit cards... so, those won't be paid.

i am hoping to wait a few months and see if the credit cards will offer a lump sum payment for a lesser % of what i owe. any thoughts?

if my mortgage company gives a forbearance, and i don't pay my credit cards... my bills will be low for a few months and i can use my income to clean up the debt to my family. then, in 5 months, when i have two incomes (wife back to work), i can make my mortgage payments and hopefully modified credit card amount .

at this point, i am in my house that i "hopefully" will be in for awhile. so my credit score is not that important to me at this point.

any thoughts, input, strategies would be GREATLY appreciated! please help!

I think it's a good idea to contact your lender regarding a forbearance. I can't say whether they will grant it or not based on your situation, but it's definitely an option worth exploring up front. If you can get that $3,500 payment put on hold until you have 2 incomes rolling in again, that would be great.

How much money do you owe the family? Are you 100% positive they expect this money back right now? You might be better off saving your cash at this point to try and make lump sum settlements on the credit card debt instead of paying off the family members first. You could always hit that debt last once the rest is taken care of. Of course, that's up to you. For some people, paying off the family first is the most important thing.

Also, based upon the amount of credit card debt you've racked up, there was obviously a spending problem that lasted for awhile. Is your spending now under control and within your new budget?

i owe family about 50k. the reason i am looking to pay them off first is because i know if i am offered a lump sum payout from the credit cards... i can always reborrow. by the time i would possibly reborrow, i will have 2 incomes and hopefully a rock solid budget in place so i can only borrow from them what i need and explain how i will repay. my spending is now under control. had one of those jobs where i was making good money and thought it would last forever. any other advice would be appreciated. like, 1. why do you think my mortgage company would not offer a forbearance? and 2. is my plan for the credit cards a good one? i mean, i gotta think if they pulled my credit report and see that i have 4 CCs maxed out and no money in the bank and thinking about bankruptcy, they would be likely to deal. am i wrong in that thinking? thanks again for your help.

96 k is a lot of debt, is there a reason why you are resistant to bankrupcy? i don't see you settling for any less than 60k, not with amex as one of your creditors. you could be using that 60k to pay back your family.

the first call i would make is to your mortgage lender, find out if forbearance is even an option for you. if it is, make sure you comply completely with whatever they ask. you do not want to risk your home.

second call should be to amex, they have a hardship program. they give you 6 months interest free, and 6 months at 9.99 % interest. you tell them how much you can comfortably afford to pay, and they accept it. during the time you are in the program your cards will be reported as late to the bureaus, as you are not paying them as agreed when you undertook the debt, so your credit will take a hit here, but at least that buys you a year to deal with everything else. Amex are absolutely notorious for suing, so you really do not want to mess with them.

as for the others, you should stop paying for a while, maybe 2 months, see if they come at you with a settlement offer. wait for them to contact you. if you get served court papers, call them and try to settle right away. you do not want a judgement on your record.

you need to save like crazy during this time. cancel cable and cell phones, do not go out to movies or dinner. keep every penny that comes into your life and save it for settlement offers. you will have much more negotiating power with cash on hand.

also, sit down with family, explain that your circumstances have changed, and you are expiencing real hardship. tell them what you plan to do to get out of it, and explain that you need to delay paying them off. i would only pay family if all other debts are taken care of, either through settlement or bankrupcy.

laurawahi (or anyone else, please)... a couple of quick questions... first, why would bankruptcy be better? and second, are you sure that AMEX will not deal? plus, couldn't i always declare bankruptcy if i wait, and if these cards do not deal, start the bankruptcy process then? wouldn't it be better to at least see if i can get good enough deals to dig out of this hole first? thanks for your help.

I agree that $96K is a lot of credit card debt , but you wouldn't be the first person to dig yourself out of a hole that deep. Bankruptcy could wipe the slate clean for you as far as your credit card debt goes. That's why it appeals to people, but I personally view it as a last resort type of option. As you mentioned, your creditors may be willing to deal if they believe your only other option is to file BK and then they would get nothing at all.

I would try and work something out with the mortgage company, credit card companies and your family. If you can't make it work you can always file Chapter 13 bankruptcy and still keep your house. It seems that keeping you home right now is very important to you. If you have a second mortgage on your home sometimes you wipe out your second mortgage after you have completed the chapter 13 payment plan. Thanks! Heather with BoostMyScore.NET