Debt Management – Need Expert?
June 18, 2009 
7 Comments
nashe asked:
I am self employed in small transportation business and used to earn 10,000-00 per month. But now, due to some problems I earn less, about 2,000-00 to 3,000-00 per month.
I am self employed in small transportation business and used to earn 10,000-00 per month. But now, due to some problems I earn less, about 2,000-00 to 3,000-00 per month.
My monthly payment as follows
House – 2000-00
Car – 1000-00
Credit card – 4000-00 ( whole amount 88,000-00)
Tried to sell the car for 60,000-00 as the loan balance is 59,000-00 but to no avail as the market value is 40,000-00 only.
Tried to sell the house for 300,000-00 as the loan balance is 299,000-00 but no one is interested as there are much better houses being developed in the neighbourhood with much lower price.
I have used my savings for the company and to pay the monthly payment.Not much left.
Only 15,000-00 in my pocket.
I really need help, really in huge debt. Clueless.
yep, you sure are clueless.
You need to consult a real debt counselor, not the armchair teens on yahoo.
It may be possible to restructure your debt (88,000 on credit cards?) but I doubt it with your reduced income. You may have to declare bankruptcy, but do it only with REAL advice and only as a last resort.
The only thing that comes to my mind is taking a home equity loan to pay off that credit card (those are tax deductible from what I understand.) Don't sell the car, you will only loose money on it. Talk to your banker about your options, especially the home equity loan (also known as second mortgage.)
One thing is curtain, you will never sell anything for more than it's market value as no one will want it.
If anything it is sold 2nd hand far cheaper.
You will have to think about a 2nd job, a high paid job, 2 higher paid jobs etc.
If you can ensure that the payments to the card holders is less but for longer, then you could earn more than you pay until you pay it off.
You would also need to ration your food, shopping etc.
Also, save for things instead of borrowing, no matter how tempting the offer; for all lending companies are trying to make money and it will result in your paying for more back.
Sabretooth
Please note, I am by no means laughing if this is
indeed a true story. I just cannot fathom that much
debt, let alone making 'only' three grand a month.
That is more than our family lives on comfortably
each month.
At any rate, if your debts exceed your income, especially
with so much (choke, sputter) credit card debt, I would
say that you should immediately sign up for Consumer
Credit Counseling. Having had personal experience with
that very company, even if you decide not to go with them,
they can help you to get a realistic view of your situation,
and perhaps offer sensible suggestions about where to
begin.
Again, I can't imagine what kind of car a person drives
that would cost a grand a month, let alone a house of
two grand per month, but I would immediately
sell it for a Honda Civic or something more sensible.
Sell what you can to pay off the credit card debt. You
may have to take a loss on the house as well.
I wish you the best in getting this large way of
life under control.
You actually do have options… the first and best would be to take out a home equity loan to pay off as much as possible… honestly though you really screwed yourself by being upside down by 20K on your car…. Your biggest problem in getting credit will be the fact that your DTI ratio is more than likely over 100 percent…. usually banks will lend on 35-50 percent DTI as the MAX…. if you have 100K in equity which it doesnt look like assuming the sell the house for 300K but no takers it is going to be tough…. I would suggest getting to a bank and ask a financial expert about it. The bank i work at has several options available and it is a national bank so if you need a name of someone to contact let me know. They may also be able to help with your business financial situation and see if they cant at least get you on the right track…. again if you need a contact or want someone to contact you about it let me know and i can get ahold of someone.
Let me give this a try:
-You can sell your house. You may want to obtain a home improvement loan of about 20,000. Curb appeal, appliances, flooring, staging. The HI loan is also deductible.
-Refi the house.
-Refi the car for 72 months. You should be able to get your payment down to 850 and skip a month. OR, you can trade your car in for a cheap used one. Even if you are shorted by a whopping 20k, a cheap 15k car should bring your new payments to about 550-650. 350-450 instant monthly savings.
Why is your credit card payment 4000/mo? At 90,000 and terrible interest like 19%, your payments should be approximately 2000.
As crappy as this may sound, beg anyone you can for an interest free loan such as your relatives. If this fails, at least get someone with excellent credit to help you take out a debt consolidation loan through a credit union. You can take a 15000-25000 personal loan at an average of 10% and start saving hundreds in interest every month. Judging from what you told me, you'd probably save 200 per every 5000 or 600-1000/mo with a debt consolidation loan.