Is it even possible for her to get out of debt?
by Mortgage Rates on Friday, November 26th, 2010 | 8 Comments
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The first thing to determine is whether she can keep her home, by law. The worst thing she could do is get home equity loan. Declaring bankruptcy is the only way out, as I see it. She will have to hire a bankruptcy lawyer to file for her and obtain certain paperwork from the creditors. After she files in Bankruptcy Court, she will have a hearing in which she will be asked questions. Maybe you and other relatives can help her with this process.
This is a tough one. Get financial counceling.
Your grandma needs to get a reverse mortgage, search for it on the net and you will have to look at a few companies to find one that will not rip her off.
This basically takes the money out of the equity in her home, and she gets the cash to do what she needs to do, while getting to stay in her home until she passes (in a long, long time).
Have her look into it, with the falling home values in Michigan, she should get a better deal now, than you guys will get after she passes.
Good luck
Your grandmother needs a credit counseling agency to help her get those interest rates down. I am using a very good one called Money Management International. 28 months ago I was in debt for over $13,000! Today I owe about $ 5900. They helped me by negotiating lower interest rates and instead of me making the payments I send them a set amount each month and they disburse the money to my creditors. They no longer allow you to use your credit cards while on the debt management plan, so you can’t get yourself in any deeper. I think it is worth a try to see if they can help your Grandmother get her finances under control and bring her some peace of mind that she is actually able to pay down her debt. Their website is moneymanagement.org Good luck to you both
ps If I owned my home free and clear I do not think I would sell especially now when it is essentially a “buyers market”
Bankruptcy may be your only option. You’ll need to find out which bankruptcy jurisdiction you’re in (eastern or western district of Michigan) Try this link for more information related to filing for bankruptcy in the U.S. http://www.uscourts.gov/bankruptcycourts/bankruptcybasics.htmlDo you know any attorneys or have any attorney friends. The attorney I work for takes on cases for certatin friends and threatens any Debt Collector with violotion of the FDCPA. Try reviewing the The Fair Debt Collection Practices Act. Careful though, with or without an attorney, this could bring on some civil suits which are costly for both parties.
If her only income is Social Security income, she is probably what they call “judgment proof,” which means they can’t garnish Social Security income.
The fact that she owns her house makes the situation a little more difficult. She is probably “over asset” for a chapter 7, but a judgment would probably attach to her house, even though her income can’t be garnished.
Best bet, contact a good attorney (ask everyone you see) to discuss several options. A good attorney will not charge you for the initial consultation unless you get into specific legal advice. If the first appointment costs and you don’t get specific advice, run for the next attorney.
Hope this helps.
Negotiating with the credit companies – very preferably through a professional intermediary – may very well eliminate the interest and possibly some of the principle. The cards have to go of course. Perhaps she could get a debit card or use a prepaid credit card for her use. Depending on the state law regarding the house doing anything regarding a reverse mortgage could be taken wrong if a bankruptcy is the only way out. Talk to a couple of credit councilors but be careful with them too. I’ve heard they like their fees up front and results ummmm…vary.
Have you ever heard of a Reverse Mortgage? That’s when you sell the house back to a bank on a time contract so that the house eventually is owned by them. They pay you for the house so you get positive cash flow. The downside is that they will usually pay at the rate they expect her to be alive, meaning that she could possibly outlive the mortage at which point she’d have to move. But if you structure it right and let her take out only 10% per year, then perhaps it would be ok. In some cases they could even structure it so that even if they eventually owned it she would not have to move at all.