Just to make sure I understand

[Anonymous]

So here's my situation:

House 1 129k no late payments

House 2   65k no late payments (can't be discharged in BK due to property settlement in divorce)

Car: 25k note in wifes name never late

Student loans: 20k in wifes name. Currently 65 a month and will rise to 165 in 2010.

CC: 30-35k around 5 cards with another 60k or so in unused lines.

Here's my dilemna.

I'm currently current on everything however I'm looking at the writing on the wall. My daughter is getting older and has special needs that will begin to eat into our income in the next 18 months again to the tune of 300-600 per month.

At that point I'll be forced to start making some tough choices. Current TU score is 698. What I want to do before that happens is ideally have a strategy for the best way to handle this. I've already refied everything I can and cut expenses to the bone it's all under 7% for the unsecured and 6% for the secured debt. The problem isn't the rates... it's the sheer amount of debt I have and the cash flow needed to service it.

I'm looking for suggestions and options.  If I let the unsecured (CC) debt go that saves me $500 per month. I realize this is not the best solution but as I understand it in reading the forums it would go like this:

OC goes about 90 days raises rates, fees etc. and attempts to collect. Then finally charges it off at some point. DOFD and SOL start running (In oklahoma) from the last time I pay on the debt. Correct?

Assuming they sell it to a CA at some point I DV and then offer to PFD to CA. Depending on if the CA follows the law I may be able to make them go 12-18 months before they sue or switch CA in which case I start the process over again.

At that point do I threaten to do BK to entice a PFD and wipe out each debt as I can? Obviously if I reach the 3 year SOL then I just have to make sure to watch for any more summons due to a suit and monitor my CR the entire time.

Any thoughts would be appreciated. And yes I recognize some would call it flat wrong. THey would be correct however my wife and I are working 3 jobs and taking care of the most precious thing to me in the world, my little girl. In my world though the priorities go like this:

God--Family--Job--Secured Creditors (House, Car, SL debt etc)--Unsecured creditors.

Again, any help or thoughts would be appreciated.

[Anonymous]

Why do you have to go through that cheesy route when you can put  one of your house for rent and get cash flow from it. Alternatively you can sell one house and stay in the other.

You can use the cash from the sale to pay down high interest rate debt and save the rest for your daughter's education. Things are not as bad for you compare to millions of people in this country. Why turn a good situation into bad? Good luck.

[Anonymous]

Sorry for the double post. I can't find the EDIT button. Please can someone clue me up on this.

I was a little confused about your second house. It seems you lost the house to divorce. Correct me if I'm wrong.

If that was the case, then my advice is to find a way to opt out of the house for your divorce wife and continue your life. Find a good Lawyer that can help you get as much money as you can from the joint investment on the house.

If your job is secured and you have a good health insurance, I will advice you to get rid of the unsecure debt and save the $500 in interest every month and hope nothing bad happens to you healthwise. If anything happens, your health insurance should cover you. You may also look for a good unemployment/disability insurance that will not cost you more than $200/month. That way you save  a net total $300 while  you are still doing great creditwise/debtwise and you can focus on what is more important in life.

[Junejer]

Scrambler, edit button is located in the "Options" drop down menu.

[Anonymous]

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@Junejer wrote:
Scrambler, edit button is located in the "Options" drop down menu.

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Thanks. I got it.

[Anonymous]

If you are putting God first in your life, then you should consider paying your debts as a primary concern. 

Many churches are developing ministries to educate and counsel their members about financial responsibility.  Perhaps, you should dedicate more prayer to the issue or seek counseling from your church.  The right answer to your question might involve some sacrifice on your part or you may find additional resources to assist you in caring for you daughter.

May God bless you.

[Anonymous]

Scrambler,

Thanks for the responses. Let me clarify a bit...

My first wife and I jointly own the house and she still lives in it. She isn't interested in refincancing or moving out of the house to sell it. I am a co-signor on the note and owe half the payment every month. Once the house is paid off under my divorce decree I have to quit claim my interest to her. The divorce is outside the SOL in Oklahoma to re-open the property settlement. The only benefit I get is sharing in some tax deductions.

Discharging that debt is not possible under the amended bankruptcy act in either a ch 7 or 13 situation. The bankruptcy would wipe out my obligation to the bank but then once the BK is finalized she can sue me for breaching my divorce decree and get a judgement and either attach it too property or wage garnish me. I would end up in the same spot after spending a considerable amount in attorney fees.

When you say get rid of the unsecured debt to mean simply stop paying on it? I'm a bit confused by your response or do you mean stop my health insurance and take that money to pay down on my debt. The issue there is that I can't find a carrier that will write a policy for my daughter. As I said she has special needs that have and will require ongoing medical care.

Any advice you could offer would be appreciated. Thanks!

Message Edited by wanuvas70 on 03-31-2009 05:02 AM

[Anonymous]

wanuvas70,

EDIT: I cannot understand your statement here (below):

"She isn't interested in refincancing or moving out of the house to sell it. I am a co-signor on the note and owe half the payment every month. Once the house is paid off under my divorce decree I have to quit claim my interest to her."

Do you mean that after the full payment on the motgage, you have no claim to the house? You cannot demand for your own share? Please elaborate in a simpler language. I have mentioned alot of things below regarding the house by assuming that both of you still have claim to the property. If that is not the case, then disregard my advice and let me know the exact situation in regards to that house. 

ORIGINAL MESSAGE STARTS HERE:

I can now understand the situation with the first house. I believe you are a responsible man who want to take care of his family and do all the right things.

The first question now is how much is your obligation out of the $65k on the house that your EX wife live?

Can you consider getting a personal loan to pay down your own part of the obligation on the house and then have the property sold or let your EX wife pay you half or part of your own share. This is sort of a double edge sword in the sense that you get some liability (loan) from paying down the debt and then turn around and get back your money(loan) and other residual cost that may result from selling the house.

These are other questions that you will need to answer:

(1) How much will the house (where your EX wife live) cost in today's market.

(2) Can you ask an Anthony if this arrangement (that I mention) above will work

(3) Can you sell your debt obligation on the house to another person who may be willing to buy it from your EX wife.

(4) If non of the above works, let an Anthony or an expert in divorce/Motgage find you a way to get out of that obligation without loosing too much in the process. You may need to give away something in the process, but the end result on cutting off your financial obligation and headache may well worth the effort and sacrifice.

Now you will be left with the following obligations in bold:

House 1 129k no late payments

House 2   65k no late payments (can't be discharged in BK due to property settlement in divorce)

Car: 25k note in wife name never late

Student loans: 20k in wife name. Currently 65 a month and will rise to 165 in 2010.

CC: 30-35k around 5 cards with another 60k or so in unused lines.

My daughter is getting older and has special needs that will begin to eat into our income in the next 18 months again to the tune of 300-600 per month.

Those are manageable obligations. If your current wife is working, let her take care of the car loan and student loan. It's called personal responsibility. If you have been a father Christmas all along, this is the time to make a critical assessment of your life, obligations and responsibility.

These responsibilities should include making sure that you pay your motgage on time to have a roof over your family and put the food on the table. Buy clothes and other relevant needs for your wife and daughter, show them love but be firm and resolute about the management of your finances. If you can not afford a vacation this years, dont be afraid to politely or humbly tell your wife and daughter that times are hard, but when things get better, you will do your best.

I am sorry as I do not intend to lecture you about how to live your life, but remember that you voluntarily came here for financial advice. My believe is that your life style and finances are strongly related, hence the piece of advice.

I do not know you personally but I will like to remind you about important things you need to take into consideration. They are as follow.

(1) Once you are able to come up with an answer about how to get out of your debt obligation regarding your 2nd house (owned with your EX wife), let your Anthony speak with her about the arrangement and ask her about what she want to do. Will she be willing to put the house for sale or will she pay you back your own share? DO NOT speak or write to your EX wife, let the Anthony do the job for you. If she call you don't discuss the issue, tell her to speak with your Anthony.

I'm sorry this may sound harsh, but the economy is not kind to anybody right now  and we got to be pragmatic about our finances these days.

(2) Second person you need to deal with is your current wife. There are few questions that you need to ask yourself.

  (a) Is your current wife on board with you about managing your expenses?

  (b) If that is true then I assume that you as a leader of the house is in control, then the ball lies in your court.

  (c) Is your current wife paying for the student loan and car loan? If yes, let her continue so that you can manage those items left on your list. If not, Why? Is she working? If she's not working, then those obligations are quite daunting indeed.

(d) Is your current wife making more money than you? If yes, is she helping with the loan? If your answer to both questions is yes, then take the ride and lead in managing the financial issue.

(e) If your current wife is not making that much money, then the question is, is she helping you with the loans? If yes, then you are in control, then if no, then that is where the real issue to discuss lies. Please let me know your answer to those  questions, may be we can iron things out.

Please, NEVER get into any argument with your current  wife because of finances. Keep calm and collected and hopefully you will ride it out. Good Luck.

As for the unsecured debt, it's not clear if the $500 you are referring to is your total monthly payment on the CC OR all the saving you get from not paying interest if all the debt is paid in full.

I do not mean to tell you to stop paying your bills, far from it. I was interpreting what you wrote as meaning that you save $500 on interest payments, so paying it off will save you the $500 that you may need to channel into other useful things. I believe you meant the advice on the forum is never to pay off your debt with your savings, but rather make savings your priority for emergency reasons.

Message Edited by scrambler on 04-01-2009 07:29 AM

[Anonymous]

Scrambler,

Thanks for your input. Let me see if I can address your questions more simply.

Yes. Once the property is paid in full I am required to quit claim my interest to my ex-wife. So in effect while I own it now I I won't own it at the end under the terms of the divorce decree. The house has a MV of about 120K right now with a MB of 65k. So technically I own 27.5k equity in the current home which increases until the home is paid off. BK law prevents me from discharging the existing debt because my divorce decree is a property settlement. It was a bad deal at the time however non financial issues were paramount and I didn't have the money to fight a protracted legal battle.

Your suggests on the house with my ex wife are all avenues I've explored and cross checked with several reputable attorneys. The BK code was amended in the 2004-05 to prevent exactly the possabilities both you and I discussed in our posts without the other parties permission. There is an appellate decision from the 9th circuit that so far has not been contradicted in other federal appellate courts and the supreme court declined to review the case in question.

The only way this becomes doable in terms of selling and taking back my current share is if my ex-wife is deceased before the mortgage is paid off. Then I have to deal with her estate and my decree can then be opened back up as the agreement is with her not the estate but the estate executor has a legal obligation to pay all debts before disbursing any assets left. And no, I am a normal person and don't even like to think like that...

On my wife's debt. She makes less than me however she pays her share of all of our expenses which includes the car and student loan.

On the cc debt the $500 is the current amount of the monthly payment.

My point in posting here is to gain ideas, insight or any useful advice. I want to pay my debts however my personal circumstances are such that absent a major unexpected positive financial surprise I know based on the run rates of my household expenses and my available cashflow I will run out of options once my daughter need some or all of the resources I am using to pay on the CC debt for her needs. I approached some of the OC's several months ago and said "look, here's my income... here's my expenses... can you write some of this off or redo the rate etc." They basically said nope, sorry pay the bill. I recognize their perspective however the bizzare thing is under the ch 7 rules it basically encourages me to run up more debt to meet the means test and then flush all the unsecured debt away. I would prefer not to do that and am looking for other options. I don't view BK as a desirable goal but it is a legal tool among others to reset a person's financial situation.

Again thanks for any advice you can offer.