Single Mom needs advice

[Anonymous]

Hello:

I never thought I would be in this predicament, but here I am and I need some advice.

I'm a single mother of a 1 year old.  Father/ex-fiance is not in the picture, doesn't contribute and I know filed for bankruptcy.  I've had the same job for the last 12 years, but in the last year to 8 months they have reduced my salary dramatically (by $1800/mth) and cut all bonuses ($15-20k/yr).  I've been actively searching for a job (recruiter and via internet) with no success.  I've had some offers but these were even lower than my current income.  I couldn't afford my home, tried putting it for sale with no success and then rented it out at $600/mth loss.  I moved in with a girl friend and I'm paying a reasonable rent.

I have a 1st at $240k (6.65%) and a 2nd for $60k (12.5%).  I've never had a late payment for either.  Both mortgages total about $2400/mth and the renter pays $1800/mth.  I just received notice that the renters will be moving out in 90-120 days. I contacted my real estate agent again and she thought I could "maybe" get $270k for the home.  There are 5 other homes for sale in the same small development. I've done my research and I don't qualify for any assistance programs because it is considered a rental home.

To make things worse I have about $80k in credit card debt - with no delinquencies ever.  3 Citicards, a Discover Card and a Bank of America personal loan.  2 of these credit cards were used for my ex-fiance's business.  I've contacted a lawyer and he claims since they are in my name the chances of getting any money from ex are almost nil - he has filed bankruptcy and vanished.  For the last 8 months I have been living of credit cards, paying for everything including child care.  I understand why I am in this predicament and don't blame anyone but myself. 

I have now reached a point were I can't pay my bills - credit cards are completely maxed.  This month I won't be able to pay my 1st mortgage.  I've never had a late payment and I feel like a criminal!!!  I have no idea how to proceed.  I contacted a bankruptcy lawyer and he said I make too much money (65k/yr) to file for Chp 7.  I have no relatives - divorced parents live in UK and they have no money.

What should I do? Should I pay the mortgages and NOT pay the credit cards?  Or should I pay the credit cards and NOT pay the mortgages?

As of today my credit scores are:

-  TransUnion  684

-  Experian  686

-  Equifax 674

I understand how I got here and the fact that I was irresponsible - I need positive, constructive feedback on how best to proceed.

I've sold some stuff on Craigslist and Ebay and have put even more stuff on - I'm selling as many possessions as I have, although it's not much.  I've downsided my car.  I've sold a lot of my clothes and have a lot of clothes on consignment.  I pack my lunches and I don't go out. I can't get a 2nd job because I have no child care on nights and weekend.

I have no clue what to do.

Any advice would be greatly appreciated!

Message Edited by LilPenguin1 on 08-19-2009 01:17 PM

[Anonymous]

What abt getting a teenager to babysit, it wouldnt be as much as daycare.  Or if you could find someone who would be willing to help you out and you could pay them a small fee.  If you lived in my area I would help you out with babysitting while you got a second job. 

I dont understand (and I dont know anything abt BK) but how can you make too much money with that much debt and it seems to me you are not making enough to pay the monthly payments and live.  I dont really have any advise for you but just wanted to wish you luck.   Vicki

[Anonymous]

First, let me express my sympathies for your predicament.

Next let me restate what I believe to be the case:

1.  $305,000 in 1st & 2nd mortgages

2.  $80,000 in CC debt, which represents 'maxed out'

3.  $65,000 / year income, but job showing decreased income and stability (reductions, etc)

I am guessing that after taxes and withholdings you take home $4,000 to $4,200.  Is that close?  If so, even if you quit paying ALL cc's, it is doubtful you could pay the mortgage based upon current income and income trend (down).

$2,400 mortgage payments.  Does this include all taxes and insurance?

What is your electric and utilities average, in the home?

Do you have an auto payment?  How much?

If the home is worth $270,000 and you owe $305,000...then it is not much better than the unsecured CC debt.  If you sell for $270k, there will be selling costs.

You might be able to get the bank to agree to a short sale.  But you probably will have to be late at least 2 payments before they will go for it.  But call and talk to them about it and explain your predicament.  Maybe they work with you now or maybe they won't until you are a payment or two behind.

The fact of the matter is tht you are bankrupt.  Your debt represents about 6 times your annual gross income.  A big chunk is unsecured CC debt with nothing to back it up.  Your secured debt is upside down significantly.

Even if you don't qualify for Chapter 7, you would qualify for Chapter 13.  You would have a payment plan for up to 5 years and then you are done....out of debt.  Your payments are structured to be within your means.  And the CH13 BK only lasts 7 years on your credit rather than the 10 years that Ch7 has.

Definitely talk to a BK lawyer and figure out your options.  And your options don't include doing nothing.  You will end up getting foreclosed, Charged Off and very possibly sued and your wages garnished.

Take action now....get a plan after you get all the information.  But with the levels you describe and your income/assets, I don't see how you will be able to work out of this.

You could attempt to stop paying CC's and focus on the home.  But if you are sued by CC's who then go after your income, then what?  You could dumpt the home and pay CC's, but when you are sued for deficiency, then what?  The debts won't just go away.

You need a new lease on life, and that will most likely involve a DMP at minimum, and BK very likely.

I hope that you are able to get something in place soon.  Good luck and God Bless. 

[jackg]

Lil,

Unfortunately there are no easy answers for your situation and I know that it makes no difference to you that millions of people are in the same situation as you.

Have you ever heard the phrase "Foxhole Catholics"? It would'nt surprise me if you had'nt but the the point is that at some point in everyone's life you reach a point where you are willing  to make make a deal with God that if he gets you out of the situation you're in you will do whatever he requires. It sounds to me like you're there.

I have no idea who you are but I'm going to pray for you every moment of the day or night that I can remember. I don't know if faith is a part of your life but at this point it's not important, you have to do what you think is right.

I'm so sorry I don't have any answers for you.

[smallfry]

txjohn has some good advice OP. Unless something changes dramatically with your income whatever the source it seems BK13 is your only out. The sooner the better. Sorry you fell into this predicament. No idea what state you live in but you are certainly entitled to back child support down the road.

[wndrwmn78]

I also just want to offer you my prayers and good wishes...with little ones of my own, I have nothing but the utmost respect and awe for single mothers. I don't know how you do it. Keep that little one in your thoughts as things get harder and harder and you'll make it through.

The only helpful advice I can give is to find a better lawyer.  

Message Edited by wndrwmn78 on 08-21-2009 12:04 AM