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Looking for some real life opinions. Right now we have just 1 lawyer opinion.

We have over $80,000 in credit card debt, as a result of trying to flip a house and failed miserably. Used the credit cards to finish the house. When we sold it we made less than $20,000 which we used to repay loans first.

Husband is only taking part time goes at work so that we can file BK if that's what's needed. We tried credit counseling and that failed because they couldn't get any credit cards reduced. Tried negotiating balances they wouldn't go for it because we were not late. So husband cut his hours and we barely get by for house, cars, and utilities.

Dilemma, he is able to find more hours but that would mean we don't qualify for chapter 7, and our chapter 13 disposable income would be high, and could go higher if he gets OT.

We stopped paying CC's about 3-4 months ago, so now they know we are serious about either settling or BK.

It's decision time.

Do we file BK and not take the extra work hours offered?
Or
Do we take the extra work hours offered and try to settle with CC's/collection agencies?

Credit score already effected down to 480 from 700 (over last 3-4 months)

No equity in home and we have loans no equity in vehicles.

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These are really questions for your BK attorney.

TravelerMSY (Nov. 03, 2016 @ 6:01p) |

Read the IBJANKY thread here at the forums.With unwavering commitment it can be done.I've done it.Best life lesson on ne... (more)

korncrasy (Nov. 10, 2016 @ 10:11p) |

OP has left the building, never to return. Seriously, she has not been back since the day of the OP, so don't waste ... (more)

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Seriously, PYBD.

 

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PYBD? I am bit out of computer slang touch

We morally want to do the right thing, but we also need to keep our family stable by not losing our home.

Just hoping someone has had a similar experience and can help advise.

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PYBD is a nice way to say "Pay Your Bills, Deadbeat" indicating that you created a mess and you need to clean it up.

Why did your husband cut his hours? You made it sound voluntary, other circumstances?

Why did you stop paying the CCs? Do you think you deserve a settlement?

Why wouldn't you take all the extra work hours even if you were going to file bankruptcy so you could pay what you could? You talk about morally wanting to do the right thing but seems as though you are not serious in that regards.

This much credit card debt is going to require professional help, but the only right answer you will see is to pay your bills one way or another.

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Pendapatan Yang Belum Direalisasi (Indonesian: Unrealized Income)

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Thanks for the definition, I'm asking for advise so I can handle the criticism as well. I'm sure those folks have never had a sticky situation.

We have been paying the bills for years, until recently when he was unemployed for 2 months, due to a serious neck injury requiring surgery for myself.

We own a home and 2 cars we never missed a payment on. We stopped paying the credit cards when they became too much due to lack of income.

He has returned to work part time since my medical restrictions are partially lifted. He is offered more hours but can't take them yet as he is needed home part time to care for our children due to my medics condition. In 2 months he should be able to pick up full time again.

We want to pay the bills one way or another. We want bankruptcy to be our last option, but at this point being this late and having part time income, is that our only option?

Has anyone ever worked with credit cards this late or is our only option looking to be bankruptcy?

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Mjg1975 said:   I'm sure those folks have never had a sticky situation.
  That's pretty judgmental and presumptuous. A lot of people are here because they were in similar situations to you, and have stuck around.

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I'm slightly confused on the house flip.
Did you spend $80k fixing it up and then sell it for a $60k loss ($20k more than you paid before renovations), or did you sell it for a $20k profit?
If the latter, why didn't you pay the credit cards with the house proceeds?

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jaytrader said:   Mjg1975 said:   I'm sure those folks have never had a sticky situation.
  That's pretty judgmental and presumptuous. A lot of people are here because they were in similar situations to you, and have stuck around.




It wasn't judgmental and presumptuous to call me a deadbeat? If someone had been in my situation why would they call me a deadbeat? Why not give constructive criticism and their situation? That's what I'm asking for, if you and others want to judge me and name call that's fine, I have my opinion as well.

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PYBD is a longtime running "inside" joke around FWF. It was established well before I was here, and I learned to love it. PYB,D. Don't take it so personally. 

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taxmantoo said:   I'm slightly confused on the house flip.
Did you spend $80k fixing it up and then sell it for a $60k loss ($20k more than you paid before renovations), or did you sell it for a $20k profit?
If the latter, why didn't you pay the credit cards with the house proceeds?


We spent $240,000 total, including small construction loan and credit cards ( between purchase price and rehab) sold it for $220,000, after repaying construction loan, realtor fees, we walked away with around $20,000 which we paid some of the credit card debt Back with, we are left with approximately $80,000. This was a horrible flip and morally we couldn't resell it in the condition we discovered it in. We also were told that we could sell it for $300,000 after our initial purchase and design. That didn't happen. We found some major issues costing us $40,000 we didn't expect. All in all we just wanted to finish and sell it. We initially hoped to sell and walk away with $40-50,000 to repay credit cards.
We also didn't expect to run into income restrictions like we have in the last 6 months. Mind you this flip happened 2 years ago, and we have been trying to pay it since then.

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It seems like the income restrictions are self-inflicted, though? Or was that just a way to qualify via the means test? I'm not a lawyer, nor do I know this for a fact, but you should be careful with whom you admit such things to. Fraud and all that...

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If you spent $240k and sold for $220k how did you walk away with $20k? math dont add up

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It sounds to me like your husband is purposefully reducing his hours to look favorable in the eyes of bankruptcy court, is that correct?

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jaytrader said:   It seems like the income restrictions are self-inflicted, though? Or was that just a way to qualify via the means test? I'm not a lawyer, nor do I know this for a fact, but you should be careful with whom you admit such things to. Fraud and all that...


Maybe I misspoke or there is a misunderstanding. He is working part time now, he has the opportunity to work full time in 2 months when my medical restrictions are lifted, starting January. We are over the means test now I'm sure.

I guess my question should have been do we file now if we file at all and would the disposable income increase once the income goes up? Or do we try to start settling?

The lawyer we met was semi helpful and sadly we don't have a lot of them in our area.

Maybe the entire thread was worded wrong. Bottom line we blew our credit cards on a horrible flip and have paid them until recently when his hours changed. Now we are just at a loss as to what to do.

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letsspendlotsofmoney said:   If you spent $240k and sold for $220k how did you walk away with $20k? math dont add up
  I'm wondering if the breakdown was like this:

$240,000 - $80,000 = $160,000 (eliminate CC debt)

$220,000 - $160,000 = $60,000 (gross of sale, without CC debt)

5% of $220,000 = $11,000 (realtor commish)

$60,000 - $11,000 = $49,000 (eliminate realtor commish)

$49,000 - closing costs (and other) = $20,000?

So it appears they walked away with $20k net from the sale, but still have $80k in CC debt.



I'm also wondering if there is a more fundamental problem here. All $80k probably didn't go to the rehab. I'm sure some lunches were bought, gas tanks filled up, tools bought, etc. Not that that really matters I guess. However, hopefully those cards are cut up and gone.

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Mjg1975 said:   Maybe I misspoke or there is a misunderstanding.
  Damn right there is:
Mjg1975 said:   Husband is only taking part time goes at work so that we can file BK if that's what's needed. 
  

Yet now you say he's part time because of your medical issues, and him having to take care of the kids? Which is it?

Regardless of the above (just trying to show you that saying certain things can land you in hot water), what is the household income? Part time can mean a $200 check per week, or a $50,000 check per week. Extreme example, yes, but we need to somehow qualify that $80k debt against income. What is his potential income in two months?

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jaytrader said:   Mjg1975 said:   Maybe I misspoke or there is a misunderstanding.
  Damn right there is:
Mjg1975 said:   Husband is only taking part time goes at work so that we can file BK if that's what's needed. 
  

Yet now you say he's part time because of your medical issues, and him having to take care of the kids? Which is it?

Regardless of the above (just trying to show you that saying certain things can land you in hot water), what is the household income? Part time can mean a $200 check per week, or a $50,000 check per week. Extreme example, yes, but we need to somehow qualify that $80k debt against income. What is his potential income in two months?


You're correct, saying this in certain ways can make them seem as though they are not. Luckily for us we have the unemployment income for 2 months to show unemployed, as well as his pay stubs and employer to note the reduced hours, and my medical disability documented.

Not sure I understand what the "qualify the debt against income" means.

As of now we have the debt, it needs to be repaid and from everyone's comments seems we just need to find a way to repay it. Once I am released from disability hopefully I can add an income to help.

Thanks everyone for the comments

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In other words, you don't want to state the household income? If that is the case, just so you're aware, you'll get a lot of flack from people here. Good luck with everything--sounds like you're shying away from what could possibly be life-changing advice from a LOT of smart people here (and some dumb ones like me).

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Mjg1975 said:   
We spent $240,000 total, including small construction loan and credit cards ( between purchase price and rehab) sold it for $220,000, after repaying construction loan, realtor fees, we walked away with around $20,000 which we paid some of the credit card debt Back with, we are left with approximately $80,000.
 

  

Math doesn't add up for me. So if you had a $20K loss, how is that you ended up with $80K credit card debt?

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jaytrader said:   In other words, you don't want to state the household income? If that is the case, just so you're aware, you'll get a lot of flack from people here. Good luck with everything--sounds like you're shying away from what could possibly be life-changing advice from a LOT of smart people here (and some dumb ones like me).


No I didn't say I didn't want to state the household income, I said I was confused by the comment, as in I don't know what that means.

I am also very sincere with my comment about repaying the debt. That seems to be the consensus here.

If you would like I can provide you our monthly budget for your comments?

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If there is a possibility of a deeper fundamental issue, posting your budget may help some people. Personally, I couldn't care less what your income is, nor your expenses. However, when you're talking about bankruptcy and having too much income for bankruptcy, posting your income may help give others a good idea of where you stand. That's all.

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I *think* you'll have to disclose a big jump in income after filing chapter 7 and that will force you into chapter 13.

In otherwords if you file bankrtupcy today and qualify for chapter 7 but then have a large increase in income then that income change will disqualify you from chapter 7 and send you back out of bankrtupcy because you'll be required to tell them your income increased. I can't imagine the courts and laws would be allowed for people to easily avoid chapter 13 means test by just limiting their income for a short period.

IANAL... but I spent 2 minutes searching google.

Call your creditors and ask to settle again. You're in a good position to negotiate them down now with limited income, awful credit, late payments and medical complications.
If you've been paying the bills 2 years you've likely already paid 20-50% of the balance via interest and minimum payments. I think the moral police should be satisfied with settling on top of what you've already paid.

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To answer (some of ) OP's questions
1) Call the credit card companies, explain the situation, and see if you can get the rates and/or principle reduced
2) Calculate what the household income would be once your husband becomes full time
3) Calculate the minimum budget you need to survive
4) Based on above, determine if it's realistic to pay off the cc loan
5) If so, come up with a payment plan and stick with it. Otherwise file for BK

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BTW... I watch couples on TV buy houses at what seems inflated prices dump a bunch of money into them only to net 20-30k for a month or two work... Good thing they have a TV show to help absorb any bad decisions. Just because there are people making money flipping houses doesn't mean it something everyone should be doing.

If you'll be using credit cards in the future for investment properties make sure you pay them off at closing, just because they were not secured with the home doesn't mean you netted any profit on the house. Better bet would be taking cash advances on credit cards and BINGO... PROFIT... Don't pay and you win...

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I'll give you a real life one-person perspective. About 4 years ago my ex-wife disappeared and left me with a mortgage and 4 kids. In addition to losing about 40% of our income overnight, I found out pretty quickly she had racked up about 80k in credit card debt (almost all in my name) as she was planning her move, and lots of other debts that I did know about. I attempted to dig out slowly and managed the payments for a while. It collapsed pretty quickly, though, and hopefully some of this info will help you.

First I tried a cash out refi on the house. I was desperate and found company who said they could help me. They promised to do the refi quickly and would pay off 100% of the debt with the cash-out. They immediately closed all of my accounts, promised almost daily to pay off all the cards, pushed of closing time and time again, then finally told me they couldn't do anything. and just walked away. This took me from excellent credit to a score in the low 400's almost instantly. It also left me with accounts that were now 90 days late. I learned the hard way not to believe a word from anyone unless they put it in writing. Looking back, this was the first major mistake I made (aside from the wife!).

I next tried BK, but found out I made too much money for chapter 7 and had too much debt for chapter 13. The laws in my state are pretty rough, so I couldn't do either. That just left me feeling more desperate. The BK process was a lot harder than I expected and, in the end, it didn't work for me at all. Don't assume you can simply use it to restart.

I next tried to negotiate. For reference, I was now 90 days late or more on all of the cards. I called every single one of my creditors and NOT ONE would negotiate at this point. I'm a pretty good salesman and had some cash in reserves to work with. I stressed that I was willing to walk away and stick them if I had too, but would prefer to pay them in full if we could work something out. The unanimous response was "go ahead and walk, we won't negotiate." A few lowered the interest rates slightly, but not one would accept a lower payoff in exchange for immediate payment in full. I read a lot of advice that said creditors would rather take less than owed to be the first to be paid and get their money now. I found this to not be the case at all. If someone has specific success strategies it probably wouldn't hurt to try. Again, don't assume this is given.

I finally turned to a debt management company. They negotiated the rates down to zero or close to it on all of the accounts. That gave me one manageable monthly payment and they managed the monthly payments to the creditors. They charged $40 a month for the service, which was way less than I would have been paying in interest. This bought me some time to think and make plans. After a couple months, I was able to sell some assets, gather up my liquid cash and started paying off the creditors one at a time. Since my interest was basically zero on all of them, I paid the smallest ones first and continued to make the same payment to the agency each month. I also took a less desirable but better paying job to increase my income, and I cut my spending to the bone. It took over two years, but I finally paid off all the debt. Just this past month I was finally able to refi the house. My credit score is now back to around 700, up from a low of about 425. There are still lots of late payments that show, but they haven't stopped me from getting credit when I needed it or refinancing the house. On a good note, I learned that I could live on a lot less money than I thought. Things like cable TV and eating out that I used to take for granted suddenly didn't seem that important when I was looking at loosing my house. I spent more time with the kids and less time (and money) going out. It's hard to imagine, but it all worked out for the better. Today I'm in a better financial situation than I ever was before and have a better perspective on what is a necessity and what isn't. There is seldom an easy way out and all the options have a cost.

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jaytrader said:   PYBD is a longtime running "inside" joke around FWF. It was established well before I was here, and I learned to love it. PYB,D. Don't take it so personally. 

Some of us do take the concept personally and seriously.

OP, don't watch so much hgtv. I remember watching one of those shows where they show a refurbished kitchen and said it cost $5000, new cabinets, granite, tile....not sure on what planet that refurb cost $5000.

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kriskos4 said:   
jaytrader said:   PYBD is a longtime running "inside" joke around FWF. It was established well before I was here, and I learned to love it. PYB,D. Don't take it so personally. 

Some of us do take the concept personally and seriously.

OP, don't watch so much hgtv. I remember watching one of those shows where they show a refurbished kitchen and said it cost $5000, new cabinets, granite, tile....not sure on what planet that refurb cost $5000.

  I can refurb a kitchen for 5 thousand bucks.

700 granite
700 tile/faucet/sink/misc
2k cabinets
1.5k SS appliances

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drodge said:   I'll give you a real life one-person perspective. About 4 years ago my ex-wife disappeared and left me with a mortgage and 4 kids. In addition to losing about 40% of our income overnight, I found out pretty quickly she had racked up about 80k in credit card debt (almost all in my name) as she was planning her move, and lots of other debts that I did know about. I attempted to dig out slowly and managed the payments for a while. It collapsed pretty quickly, though, and hopefully some of this info will help you.
 

Owee, bro.  I feel the hurt for you.

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80k in credit card debt, a small income and no real prospects? i would just default on it and let the chips fall.

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OP had money pit. Was convinced of it & kept digging. Lies about why project was finished "Couldn't morally sell in that condition". Truth was thought we could still make it work. Could have saved $ by stopping work, disclosing condition & selling.

And after that so many wrong decisions so fast it boggles. GL & learn how to call BS on each other.

 

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If you had lost $1 billion, you could have filed for bankruptcy and carried forward the loss so you wouldn't have to pay taxes for many years. Then later, you could tell people how smart you are for doing so and run for president.

Seriously, though, all of you who are criticizing OP and telling her to PYBD, do you feel the same about the banks which helped tank the economy 9 years ago? I haven't read the thread in detail, but if bankruptcy is a viable option, it should be considered.

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kriskos4 said:   
jaytrader said:   PYBD is a longtime running "inside" joke around FWF. It was established well before I was here, and I learned to love it. PYB,D. Don't take it so personally. 

Some of us do take the concept personally and seriously.

OP, don't watch so much hgtv. I remember watching one of those shows where they show a refurbished kitchen and said it cost $5000, new cabinets, granite, tile....not sure on what planet that refurb cost $5000.

  And some of us need to learn not to take what RANDOM PEOPLE ON THE INTERNET say personally. Just saying.

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kriskos4 said:   
jaytrader said:   PYBD is a longtime running "inside" joke around FWF. It was established well before I was here, and I learned to love it. PYB,D. Don't take it so personally. 

Some of us do take the concept personally and seriously.

OP, don't watch so much hgtv. I remember watching one of those shows where they show a refurbished kitchen and said it cost $5000, new cabinets, granite, tile....not sure on what planet that refurb cost $5000.


Those shows are entertainment, not audited financials. We can enjoy some of them to pass the time, but as skeptics who a long time ago were on the very unfashionable fringes of show business, we don't believe a word about what they claim happened or cost. And that doesn't even account for the unavoidable variations by region or time (they seem to have reruns that span years).

rated:
I've yet to understand how people get themselves in a mess like this, especially when they have kids.  Finances aside, it seems like the OP and spouse have huge communication issues as well.  

I don't have any real world experience with this, but I have friends that do and they echo much of what has been said here.  Try to renegotiate with your creditors and if that doesn't work, file CH 13 BK. 
 

rated:
SlimTim said:   
kriskos4 said:   
jaytrader said:   PYBD is a longtime running "inside" joke around FWF. It was established well before I was here, and I learned to love it. PYB,D. Don't take it so personally. 

Some of us do take the concept personally and seriously.

OP, don't watch so much hgtv. I remember watching one of those shows where they show a refurbished kitchen and said it cost $5000, new cabinets, granite, tile....not sure on what planet that refurb cost $5000.


Those shows are entertainment, not audited financials. We can enjoy some of them to pass the time, but as skeptics who a long time ago were on the very unfashionable fringes of show business, we don't believe a word about what they claim happened or cost. And that doesn't even account for the unavoidable variations by region or time (they seem to have reruns that span years).

  

I used to watch some of them a few years ago.    It seemed almost all the programs on flipping were always depecting huge profits and a basic formula where the flippers buy a house, run into some unforeseen problems, shout at their contractors, argue among themselves, then end the show with a 5-6 figure profit.   

There was one program I remember watching where people tried flipping and more often than not they lost money or ended the program with the house unsold after weeks on the market.   That one seemed really realistic.

 

rated:
If you let the cards go to collections, and they sue you... there is a half decent chance that they won't bother to provide enough admissible evidence to actually get a judgment... If you want to roll the dice, leave it go for the 12-18 months it takes for a charge-off to get to the collection agent. That's when they might negotiate. pile up some cash to make a lump sum to make it all go away sort of offer.

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Many people do not know how to do calculations on a flip.

When you purchased the flip how much did you expect to profit? 20K? 40K? Because that would make your initial calculations on the flip waaaaaay off....like 100K off, that's almost 50% of the house!

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jaytrader said:   
kriskos4 said:   
jaytrader said:   PYBD is a longtime running "inside" joke around FWF. It was established well before I was here, and I learned to love it. PYB,D. Don't take it so personally. 

Some of us do take the concept personally and seriously.

OP, don't watch so much hgtv. I remember watching one of those shows where they show a refurbished kitchen and said it cost $5000, new cabinets, granite, tile....not sure on what planet that refurb cost $5000.

  And some of us need to learn not to take what RANDOM PEOPLE ON THE INTERNET say personally. Just saying.

  
I follow all the instruction I get on the interwebs.  I used to not pay my bills but FWF set me straight on that a few years ago.

 

Skipping 5 Messages...
rated:
OP has left the building, never to return. Seriously, she has not been back since the day of the OP, so don't waste your time.

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