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Aagot
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| Posted: Jan 30 2014 at 10:46am | IP Logged
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Hi Ladies you all have such great ideas, i promised a dear friend to put her situation before you and ask your advice. Frankly, I am at a loss as to what to tell her. Her husband is employed but knows he has to get out. He cannot handle the stress and demands and also sees his position disolving within a year. The stress is also killing their marriage and relationship with their 7 kids.
They are in alot of debt. She confided that their monthly bills and just the minimums on credit cards is $300 more than the pay check. This does not leave room for new expenses like food .This shocked me as they seem to live frugally, no extravagent toys or vacations etc. they did have unexpected med, repair, and car bills.
I asked it they could move. There are no job openings in his very narrow field in the area they live now. There are openings out of state but, she pointed out that, their current mortgage on a 5 bedroom house is less than what rent would be on a two bedroom apartment where the jobs are. And a two bedroom would be quite a squeeze with 9 people.
Oh, and they estimate that it would cost at least 20,000 to get their home ready to sell.
To make matters worse, her husband is doubting God's existence or at least His love and feels like all his prayers are unheard. Yet he does ask her to pray, so I think there must be some faith left there. She asked him to talk to a priest about it but he won't. He says there is no priest in the area that would understand his situation.
Other than declaring bankruptcy, I don't know what to suggest.
Any ideas? I am sure she would appreciate prayers for a miracle too.
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SeaStar
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| Posted: Jan 30 2014 at 11:24am | IP Logged
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What a hard situation 
Last fall I listened to an excellent book on tape from the library:
Mary Hunt's Debt Proof Living
I can't think of another book I have read that has been so full of common sense and helpful ideas for getting out of debt and/or staying that way.
I was not familiar with Mary Hunt's story before listening to this book. It's a doozy. Basically, she was a credit card addict and ran up over $100,000 in unsecured credit card debt. The book tells how she and her husband paid it all back without declaring bankruptcy.
The book is full of so much great information- I plan to have my kids read it when they are a bit older. it is also a very hopeful and positive book. It is bound to lift the spirits of anyone feeling bowed down by hopeless debt. It outlines a Debt Reduction plan that is very doable.
I will pray for this family!
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Melinda, mom to ds ('02) and dd ('04)
SQUILT Music Appreciation
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guitarnan
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| Posted: Jan 30 2014 at 11:30am | IP Logged
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Praying for your friend and her husband!
Has her husband actually looked for other jobs? If he's good at what he does, he might be able to negotiate moving costs/house sale help as part of a compensation package.
Did your friend mention equity in their home? I'm guessing they probably don't have much, but if they did, they could perhaps tap into some of that to fix up their home for sale.
Did they talk with a Realtor about fixing up their home to sell? Could they do some of the fixes themselves to save money? (Children can help spruce up yards, clean, etc., too.)
There are no easy answers, I know.
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Nancy in MD. Mom of ds (24) & dd (18); 31-year Navy wife, move coordinator and keeper of home fires. Writer and dance mom.
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Aagot
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| Posted: Jan 31 2014 at 10:54am | IP Logged
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Thanks Nancy and Melinda!
Excellent advise. I will pass it onto her.
Not sure about what equity they have but I had not thought of that so maybe they haven't either.
That book looks great! Just might grab a copy from the library for myself. 
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SallyT
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| Posted: Jan 31 2014 at 11:07am | IP Logged
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I don't know what kind of tax refund they can expect this year, but I've often heard the advice to use the refund to pay off debt before you contemplate doing anything else with it. We've done that before -- pay any cards we have OFF and either cut them up or put them away, so that we're not tempted to use them.
I know all too well how you can fall into the rut of using the card to make up for a cash shortfall between paychecks . . . but then it bites you worse than ever. But eliminating or driving down those payments can free up at least a little monthly cash.
Can they think outside the box of what her husband does right now? Does he have skills that would transfer to another field or kind of position, possibly more locally? Would it be worth the trade-off of leaving something he "does," which causes this huge stress and uncertainty, for something outside those parameters that might ease the stress and possibly be more stable?
Is it possible for her to work, part-time or from home? While I believe strongly in doing everything possible to live on one income, so that children have a mother at home, sometimes that's not possible, at least for a season. Is there something she could possibly do on a flexible basis to help at least a little with the financial burdens?
Just some random thoughts here . . .
Sally
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TryingMyBest
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| Posted: Jan 31 2014 at 11:43am | IP Logged
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Does she have equity in their home? Do you they only one mortgage or a second?
If they are underwater, do they live in a recourse state or non-recourse state? If you're not familiar with those terms, in a recourse state, banks can attempt to collect mortgage debt directly from the borrower. In a non-recourse state, California for example, you are not personally responsible for your primary mortgage as long as you've never refinanced. If she's in a non-recourse state and there is no equity in their home, they can walk away from the mortgage. I'm not advocating that but sometimes people have to take desperate measures to survive financially.
I also think that exploring bankruptcy might make sense. It's nothing to be ashamed of. Since the financial crisis started, I know of many people who have declared bankruptcy. Most were good middle class people pushed over the edge by unexpected medical bills or losing equity in their homes. If they meet the requirements for bankruptcy (especially high credit card debt) it might make sense for them. It's nothing to be done lightly but in certain circumstances it makes sense.
The law that exempted forgiven mortgage debt from taxation expired at the end of 2013 so if they do a short sale or allow their home to go into foreclosure, they will be taxed on the forgiven debt. The only way around that is by declaring bankruptcy before the foreclosure. Many people are hopeful that the law will be extended through the end of 2014 but there's no guarantee Congress will do it. This is critical because there is no way out of your tax debt. The federal government has authority to garnish wages so federal tax implications of any decision must be considered first.
Honestly, while I know responsible people never want to think about bankruptcy, it can be a lifesaver in certain situations and this may be one of them. If she were my friend, I'd recommend at least consulting with a reputable bankruptcy attorney. A good bankruptcy attorney will also be able to give them advice about the house; e.g. should they pursue a short sale if they were to move out of state or let the house go and the tax implications for the options.
Are they expecting a big tax refund? If so, they should re-evaluate their withholding. They may be overwithholding and then using credit cards to make up the difference. This means that they are giving an interest free loan to the government and paying interest on the loans given to them by Chase, Citibank, etc.
Jenn
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JennGM
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| Posted: Jan 31 2014 at 12:01pm | IP Logged
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I'm sure they looked into this, but...
Credit cards are difficult because the interest is so high and minimum payments don't knock down the debt but only cover the interest.
If they have equity, a home equity loan to roll their debt and done extra money for house repairs all under a lower interest rate might be cheaper than their monthly payments.
Another non ideal option is to roll all the credit cards into one that is no interest for a year. If they find extra cash to pay down that debt, then the consequences of the high interest in a year might not hurt as much.
I don't believe in all the extreme couponing, but many if those stories began when the families were in dire straits like hers. It would take extra time and research and planning, but it seems like that could help tremendously.
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Jennifer G. Miller
Wife to  & ds1  '03 & ds2  '07
Family in Feast and Feria
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Aagot
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| Posted: Feb 04 2014 at 10:09am | IP Logged
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Thanks everyone! I think all this info has really lifted their hopes that they can get out of this.
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stellamaris
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| Posted: Feb 04 2014 at 1:44pm | IP Logged
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I believe there are also companies that will help consolidate debt and reduce the monthly payments. Perhaps speaking with their local banker might be a thought? He might be able to direct them to resources that could help them reduce their debt and plan a working budget.
What about ideas for second income? Could she work part time at all (I know with so many children it might not be possible). Does she have any skills that might translate into something she could sell online? Tutoring? Sewing? Even cleaning a house or two on the weekend might be enough to bring them up to break even.
Praying to St. Joseph for this family's temporal needs.
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In Christ,
Caroline
Wife to  dh 30+ yrs,ds's 83,85,89,dd's 91,95,ds's 01,01,02,grammy to 4
Flowing Streams
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4Real Forums : Tea and Conversation
Topic: Ideas for financial issues?
