Hello Every One This is my first time posting here and I would appreciate your help. I am relatively new with my credit problems. Please pay attention to my situation as I am asking for your experienced advice. FYI, I am currently 32 years old. The only reason I bring up marital status, income, mortgage equity etc, is because these are the things one looks at when analyzing BKs etc. Critical Path 1998 Married in California Court 2001 With wife, bought our first home (in California) 2002 Mid Life Crisis hits and I get urge to start an export business without consent of wife 2002 Q2 Start to Rack Up debt for purposes of business (only opened under my name) 2002 Q2 Emotional Separation of Marriage begins 2002 Q2 Increasing Trend of Non secured Debt Reaches All time High 2002 Q2 Begin to pay bills 1-2 months late consistently (except mortgage loans) Some small balances, along with Citibankâ??s get transferred to CAs 2002 Q2 Total Visible Unsecured Debt $36,000 (MBNA, Citibank, BofA Visa, Household Bank, Best Buy, Citicards,) 2002 Q3 Refinance home, take some equity out of home to pay for now soon to be ex wife 2001 car (60K left in equity in home, which I have agreed to leave to legally separated wife on legal separation contract.) 2002 Q3 GMAC reposes SUV vehicle (solely under my name) and starts to send/call home to contact me for settlement of difference (5k) 2002 Q4 Began legal separation with wife, but am still living with her (sleep in separate bedrooms.) 2002 October: Begin Consumer Credit Counseling Program to manage minimum monthly payments and interest rate 2003 Q1 Total Non visible Non Secured Debt is $35,000 I do not want to further screw up my life due to risky business behavior and poor judgment, for years I have carried myself responsibly and I feel that the last couple of years I have thrown caution into the wind for the opportunity to make some $$$ inroads. Now I am paying for it. Luckily I still have a descent job making 55K and so I can afford to BARELY pay the bills. If I continue to pay the minimum monthly payments it will take me 7 years to pay off the 35K in unsecured debt. My objective is to be in a position to QUALIFY FOR A HOME LOAN in 3 years once my debt/income ratio improves, and work on some of the clean up strategies being reported here. I will continue to browse this website for proven techniques on REBUILDING MY CREDIT. Here are my questions: 1.Should I continue my current path: work with CCS and SLOWLY payoff the debt? 2. File BK and instead save those payments for a future down payment? What are the implications to the equity of the home? 3. Is GMAC likely to sue me for the 5k in upside down funds from the REPO?
Quite frankly I don't think either option #1 or #2 are the best options by a long ways. $35K is really very little debt indeed. We've seen people with well over $250K in debt get themselves completely out of debt and with clean credit ratings well into the 700 range many times. And they didn't file BK or use and debt consolidation plans either. How likely is GMAC likely to sue you? You could probably get lots of opinions on that and still would not have any concrete answer. They may or they may not. One thing you do need to be aware of is that if they do sue you it isn't going to make any difference whatever to them what prior agreements you might have with your ex even if those agreements were set in stone via orders of the divorce court. Divorce court orders don't mean much if anything at all in debtor's courts. If your ex don't own the house totally and completely they can go after it via a lien although they probably could not force a sale.
I agree. CCS is almost always a terrible option because -- with respect to long-term credit rating -- your scores will be practically as bad as with bankruptcy. In other words, some people consider CCS to impact your credit health as strongly as bankruptcy but without the debt-relief benefits of real bankruptcy. On the other hand, anybody who's been through bankruptcy will also tell you that this option's not a cakewalk; in fact, having the judiciary breathe down your back regarding your finances is sometimes experienced as a traumatic and humiliating experience. Moreover, both CCS and bankruptcy are far more difficult to deal with when cleaning up your reports than are regular paid and unpaid chargeoffs. That said, you're right, you do risk lawsuits and judgements; however most creditors don't go that far unless the amount is very high. (There are exceptions, of course, and you'll see those posted to the board as well.) My advice to you would be: 1) Read and reread the "INTRO" threads and attendant links. 2) Learn all you can about the Fair Debt Collection Practices Act and about validation. 3) Learn all you can about the Fair Credit Reporting Act so that you'll be ready to deal with your CRA reports. 4) Ask advice as you go. Doc P.S. It sure is easy being a total stranger offering armchair advice. If you do the legwork and still feel uncomfortable with all of this even after asking more questions later, then by all means seek competent legal counsel. The only thing I want you to know is that quite a few people here have been in your situation and successfully navigated it. Finally, I agree with Bill that $35k debt, while certainly not piddling, may well be more manageable than you think -- or at least a portion of it may be manageable -- so you may be able to preserve portions of your credit history even now. Such history will prove useful as you rebuild later.
And if I were to weigh in, I'd say; immediately change your name from Bornlooser to Bornwinner. Welcome aboard.
How bout option #3? Settling your debts with the OC's and CA's. Since you live in california, you have the option of settling your debts w/ restricitive endorsements, i.e. deletion of the tradeline from your credit reports in exchange for 35-50% of the balance owed. Carefully executed, I'd say you might have a shot at slashing the 35K in half or more. That shouldn't be much problem to take care of when your raking in 55K a year. As for the repo, leave it alone for now, but be prepared for when the time comes to be sued. Learn as much about UCC and the proper repo rules as you can to give yourself a defense in court.
My ex wife is going trough an emotional roller coaster, sometimes she still cooks me dinner, sometimes she is very angry at me for the financial mess I created for both of us. Very shortly it could be necessary for me to start looking for my own place to live, which will only add to my financial stress since I will incurr more expenses. Something has to give. If I move out and get my own place, most definetly I would have to stop my credit counselling contract. I would have to, in order to live. I have a car payment which I am upside down by about 3K. I have student loans with a minimal monthly payment. I have a legal obligation to the ex wife stated on the separation papers where I will pay monthly for the next 12 months. IF-IF I was to stop my credit counselling program, and reduce the min monthly payments with the OC, at that point I would most likely be at risk of facing lawsuits and judgements from my unsecured debt creditors. Who would be most likely to come after me: MBNA, Citibank, BofA, Household bank, GMAC (repo.) I am sure there must be members here who have had some experience with some of these before? To the experts, you still think BK is not the answer? Would I have to, actually could I still be able to play out my last cards through the strategies laid out on this board? Validating, suing, negotiating, etc. A bit of support is much appreciated right about now.
