My son and daughter in law (and 2 grandsons) live in a suburb of MN. Last year they purchased a house in WI and spent tons of money to fix it. They have not been able to sell it. They are paying over $2500 worth of bills on it. The bank will not give them enough to pay it off. They owe tons of money on credit cards. They are now desparate. Should they declare chapter 13? My son makes about $100,000 a year, but they are totally behind and now their credit card holders will give them no more money. We pay for one of their vehicles and my grandson%26#039;s preschool. No one else in either family has the means to help them. Any advice? My son feels like a failure and is very depressed. Thank you
My son fixed a house 1 year ago. Could not sell Maxed credit cards. Owes 80,000 Declare chapter 13?
No.
Bankruptcy, unlike bad credit, will always remain on any check. If either your son or DIL were to get a new job, they would have to admit having declared bankruptcy.
I would suggest the book Total Money Makeover by Dave Ramsey. Get it for them for Christmas. Ramsey explains how anyone can get out of debt, whether $100,000 or $500,000 or $200. Get it for them now.
Ask them to try this:
1) Sell their cars and get one old clunker. FOR now they only need that one car.
2) Transfer to a different, cheaper preschool, if possible.
3) Don%26#039;t loan them money. Either given them money or don%26#039;t give them anything.
Basically, your son and DIL need a total money makeover. They both need to get second jobs (for 13 months or so) and sell as much as they can. They CAN get out from debt, but they both need to work 100% towards that goal. They also need to realize that they don%26#039;t need to get everything done now. Do they realize that fixing their house was what put them under?
Also, tell them to CUT UP THEIR CREDIT CARDS! If they don%26#039;t have the money, they don%26#039;t need it.
My son fixed a house 1 year ago. Could not sell Maxed credit cards. Owes 80,000 Declare chapter 13?
Well, it sounds like a pretty bad situation. I have access to mortgages for up to 125% of the home%26#039;s value. It may or may not be an option depending on his credit. That might help in the short-term. But, I would not advise it if the real estate market he is in is not appreciating. If you have any other questions, feel free to email me: peter@chicagobancorp.com.
My son fixed a house 1 year ago. Could not sell Maxed credit cards. Owes 80,000 Declare chapter 13?
that is a risk with fixing a house to sell it, sorry about that. he was smart to declare chapter 13 before he got into even worse debt.
he will have to ride it out and get it repaid, he is lucky to have a 100k jon, not a 30 or 40 k job though.
his credit history is stained for life though, if he gets out of debt, he may not be able to get another credit card
he must ride it out and get the debt repaid.
My son fixed a house 1 year ago. Could not sell Maxed credit cards. Owes 80,000 Declare chapter 13?
So basically they were trying to flip a house. Flipping a house is a very risky thing to do especially when the market is turning. I think the way to sell the house is to have a drop in the price. Much more than a few thousand. Get it to a range where he is still making out or is cutting it close and get the people in to see it. I do not think they need to take such a drastic step as to file chapter 13. Try selling things that you could do with out. Maybe if you have two cars, sell one and try to work with one car. There are many things that they could do instead. Talk to People about it and see what others say.
My son fixed a house 1 year ago. Could not sell Maxed credit cards. Owes 80,000 Declare chapter 13?
Of course they can file bankruptcy. But to do so now would be like handing their 2nd house to their creditors. Worst case scenario is that the house doesn%26#039;t sell until it goes to auction and then they only get $50000 for it. That leaves your son and DIL liable for the balance owed to their creditors, so they would end up filing bankruptcy.
Or, they can come to the realization that they are not going to make money on this house. Buck it up, sell it for what they can get for it, and then either sign agreements to their creditors to pay off the smaller balances, or make the decision at that time if they need to file bankruptcy.
Your son and DIL need to realize that by buying an investment property (the house) they formed a company and they took the risk of assuming personal debt for a business investment. Trust me, I know it sucks, my husband and I bought a business that was grossly misrepresented and are now nearly $1.5 million in debt, all personally guaranteed. The economy is killing us and coupled with the higher interest rates and utilities we are struggling. Many are.
The reason your son is depressed is that he knows what he needs to do (admit failure %26amp; suck it up), he just doesn%26#039;t want to. Tell him that everyday he puts off making a decision, is one more day%26#039;s interest and penalties.
Good luck to them, they are in a tough situation and I feel for them.
My son fixed a house 1 year ago. Could not sell Maxed credit cards. Owes 80,000 Declare chapter 13?
There%26#039;s tons of advice on how to handle debt-they might look at Yahoo Finance or MSN money. I believe there%26#039;s lots of people in debt trouble just like your son-after all, we%26#039;re told these days, debt is good. Chapter 13 will stay with them a long time-he might feel better if they change their lifestyle- or they may not be able to make the tough decisions.
I%26#039;d recomment looking at this link:
http://www.cccsnc.org/about.cfm
Lots of information but this is local-maybe you can find one closer. But BE CAREFUL-there are so many fly by night %26quot;credit counseling%26quot; agencies. Look for .org for non-profit and make sure there%26#039;s not some other financial title %26quot;Great financial Management%26quot; etc. somewhere, even on the bottom of the website.
Tell your son there are others like him and good luck!
http://www.cccsnc.org/about.cfm
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