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Expert Q&A: Avoid Foreclosure by Prioritizing Needs

Written by Tim Peak on September 25, 2011.

Dear Erica, I’ve had great credit almost all my life and up until three years ago, never paid a bill late. But since my wife got sick and had to quit her job, we’ve struggled and now we’re facing foreclosure on our house. The last time I checked my credit report, we only had one late credit card payment, but we’ve had a bad couple of months and I suspect my wife has paid some late. I used to have a 700 credit score, but I’m guessing it’s going to be shot after this. What will a foreclosure and a couple late payments do to our scores? Are we going to have to rent for the rest of our lives after this? We’re both in our mid-50s. Tom

Dear Tom, Stop obsessing about your credit score! I’m not saying it isnt important, but you’ve got far more important things to think about and do right now.

Your wife is ill. She needs your attention and help, so that’s number one. I’m sure you know that, but it bears a strong mention to anyone else reading this column. There is simply no substitute for good health and when you’re sick, having loving people around you who do not focus on money or credit when youre around is key. If I were you, my first order of business would be to relieve her of bill-paying duties in the nicest possible way. She may want to hang on, but it doesn’t appear she can handle them.

Of course, with her working days gone for the time being, the entire household’s financial burden has been placed on your shoulders. I hope you aren’t too hard on yourself for not being able to pay the mortgage and other expenses on your single paycheck. Most people would fall behind if they lost half of their combined income.

What you must do now is prioritize. You have credit card debt as well as the house payment. Many people in similar situations try to do it all by paying a little to each or by paying their unsecured balances rather than their secured ones. However, it may be possible to keep your home if you let some of the other obligations fall to the wayside.

First, do the math. Subtract your mortgage and other essential expenses from your monthly income. If you can cover them, wonderful. Then get back on track by contacting your lender. Explain what’s going on and see if you can make up any back payments. After that, you have a couple of choices:

  • Set up a hardship plan. If you think your wife will be on the mend soon within a year and able to work again, ask the creditors to accept lower (or no) payments until that happens. Because you’ve kept your credit so clean up until now, you have a better chance of getting accepted than someone who has had a lengthy history of payment problems.
  • File for bankruptcy. There are two kinds for individuals a Chapter 13 bankruptcy and a Chapter 7. A Chapter 13 is a court-supervised payment plan where you get to keep your property, including a home, as long as you repay a portion of your liabilities. With the 7, you would discharge allowable debts, which can free up funds to pay your home loan. If the legal route sounds right, check with an attorney to determine which direction you ought to go.

OK, now back to your score. A foreclosure certainly hurts it, but mainly because it’s preceded by a bunch of missed payments. Making lessor payments though the hardship plan or filing for bankruptcy also knocks the numbers down. But if you get to keep the house, a poor score would have no impact one way or the other.

Even if you lost your home and had to rent, you’re hardly the only one going through such a financial disaster. Many landlords are understanding. And would you be a tenant forever? Who knows. Remain positive and do what it takes to make it through this tough time.

I hope your wife recovers soon.

           

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    Expert Q&A: Avoid Foreclosure by Prioritizing Needs

    Written by Tim Peak on September 25, 2011.

    Dear Erica, I’ve had great credit almost all my life and up until three years ago, never paid a bill late. But since my wife got sick and had to quit her job, we’ve struggled and now we’re facing foreclosure on our house. The last time I checked my credit report, we only had one late credit card payment, but we’ve had a bad couple of months and I suspect my wife has paid some late. I used to have a 700 credit score, but I’m guessing it’s going to be shot after this. What will a foreclosure and a couple late payments do to our scores? Are we going to have to rent for the rest of our lives after this? We’re both in our mid-50s. Tom

    Dear Tom, Stop obsessing about your credit score! I’m not saying it isnt important, but you’ve got far more important things to think about and do right now.

    Your wife is ill. She needs your attention and help, so that’s number one. I’m sure you know that, but it bears a strong mention to anyone else reading this column. There is simply no substitute for good health and when you’re sick, having loving people around you who do not focus on money or credit when youre around is key. If I were you, my first order of business would be to relieve her of bill-paying duties in the nicest possible way. She may want to hang on, but it doesn’t appear she can handle them.

    Of course, with her working days gone for the time being, the entire household’s financial burden has been placed on your shoulders. I hope you aren’t too hard on yourself for not being able to pay the mortgage and other expenses on your single paycheck. Most people would fall behind if they lost half of their combined income.

    What you must do now is prioritize. You have credit card debt as well as the house payment. Many people in similar situations try to do it all by paying a little to each or by paying their unsecured balances rather than their secured ones. However, it may be possible to keep your home if you let some of the other obligations fall to the wayside.

    First, do the math. Subtract your mortgage and other essential expenses from your monthly income. If you can cover them, wonderful. Then get back on track by contacting your lender. Explain what’s going on and see if you can make up any back payments. After that, you have a couple of choices:

    • Set up a hardship plan. If you think your wife will be on the mend soon within a year and able to work again, ask the creditors to accept lower (or no) payments until that happens. Because you’ve kept your credit so clean up until now, you have a better chance of getting accepted than someone who has had a lengthy history of payment problems.
    • File for bankruptcy. There are two kinds for individuals a Chapter 13 bankruptcy and a Chapter 7. A Chapter 13 is a court-supervised payment plan where you get to keep your property, including a home, as long as you repay a portion of your liabilities. With the 7, you would discharge allowable debts, which can free up funds to pay your home loan. If the legal route sounds right, check with an attorney to determine which direction you ought to go.

    OK, now back to your score. A foreclosure certainly hurts it, but mainly because it’s preceded by a bunch of missed payments. Making lessor payments though the hardship plan or filing for bankruptcy also knocks the numbers down. But if you get to keep the house, a poor score would have no impact one way or the other.

    Even if you lost your home and had to rent, you’re hardly the only one going through such a financial disaster. Many landlords are understanding. And would you be a tenant forever? Who knows. Remain positive and do what it takes to make it through this tough time.

    I hope your wife recovers soon.

               

    Similar Posts:

    Share

    Post Comment

    Expert Q&A: Avoid Foreclosure by Prioritizing Needs

    Written by Tim Peak on September 25, 2011.

    Dear Erica, I’ve had great credit almost all my life and up until three years ago, never paid a bill late. But since my wife got sick and had to quit her job, we’ve struggled and now we’re facing foreclosure on our house. The last time I checked my credit report, we only had one late credit card payment, but we’ve had a bad couple of months and I suspect my wife has paid some late. I used to have a 700 credit score, but I’m guessing it’s going to be shot after this. What will a foreclosure and a couple late payments do to our scores? Are we going to have to rent for the rest of our lives after this? We’re both in our mid-50s. Tom

    Dear Tom, Stop obsessing about your credit score! I’m not saying it isnt important, but you’ve got far more important things to think about and do right now.

    Your wife is ill. She needs your attention and help, so that’s number one. I’m sure you know that, but it bears a strong mention to anyone else reading this column. There is simply no substitute for good health and when you’re sick, having loving people around you who do not focus on money or credit when youre around is key. If I were you, my first order of business would be to relieve her of bill-paying duties in the nicest possible way. She may want to hang on, but it doesn’t appear she can handle them.

    Of course, with her working days gone for the time being, the entire household’s financial burden has been placed on your shoulders. I hope you aren’t too hard on yourself for not being able to pay the mortgage and other expenses on your single paycheck. Most people would fall behind if they lost half of their combined income.

    What you must do now is prioritize. You have credit card debt as well as the house payment. Many people in similar situations try to do it all by paying a little to each or by paying their unsecured balances rather than their secured ones. However, it may be possible to keep your home if you let some of the other obligations fall to the wayside.

    First, do the math. Subtract your mortgage and other essential expenses from your monthly income. If you can cover them, wonderful. Then get back on track by contacting your lender. Explain what’s going on and see if you can make up any back payments. After that, you have a couple of choices:

    • Set up a hardship plan. If you think your wife will be on the mend soon within a year and able to work again, ask the creditors to accept lower (or no) payments until that happens. Because you’ve kept your credit so clean up until now, you have a better chance of getting accepted than someone who has had a lengthy history of payment problems.
    • File for bankruptcy. There are two kinds for individuals a Chapter 13 bankruptcy and a Chapter 7. A Chapter 13 is a court-supervised payment plan where you get to keep your property, including a home, as long as you repay a portion of your liabilities. With the 7, you would discharge allowable debts, which can free up funds to pay your home loan. If the legal route sounds right, check with an attorney to determine which direction you ought to go.

    OK, now back to your score. A foreclosure certainly hurts it, but mainly because it’s preceded by a bunch of missed payments. Making lessor payments though the hardship plan or filing for bankruptcy also knocks the numbers down. But if you get to keep the house, a poor score would have no impact one way or the other.

    Even if you lost your home and had to rent, you’re hardly the only one going through such a financial disaster. Many landlords are understanding. And would you be a tenant forever? Who knows. Remain positive and do what it takes to make it through this tough time.

    I hope your wife recovers soon.

               

    Similar Posts:

    Share

    Post Comment

    Expert Q&A: Avoid Foreclosure by Prioritizing Needs

    Written by Tim Peak on September 25, 2011.

    Dear Erica, I’ve had great credit almost all my life and up until three years ago, never paid a bill late. But since my wife got sick and had to quit her job, we’ve struggled and now we’re facing foreclosure on our house. The last time I checked my credit report, we only had one late credit card payment, but we’ve had a bad couple of months and I suspect my wife has paid some late. I used to have a 700 credit score, but I’m guessing it’s going to be shot after this. What will a foreclosure and a couple late payments do to our scores? Are we going to have to rent for the rest of our lives after this? We’re both in our mid-50s. Tom

    Dear Tom, Stop obsessing about your credit score! I’m not saying it isnt important, but you’ve got far more important things to think about and do right now.

    Your wife is ill. She needs your attention and help, so that’s number one. I’m sure you know that, but it bears a strong mention to anyone else reading this column. There is simply no substitute for good health and when you’re sick, having loving people around you who do not focus on money or credit when youre around is key. If I were you, my first order of business would be to relieve her of bill-paying duties in the nicest possible way. She may want to hang on, but it doesn’t appear she can handle them.

    Of course, with her working days gone for the time being, the entire household’s financial burden has been placed on your shoulders. I hope you aren’t too hard on yourself for not being able to pay the mortgage and other expenses on your single paycheck. Most people would fall behind if they lost half of their combined income.

    What you must do now is prioritize. You have credit card debt as well as the house payment. Many people in similar situations try to do it all by paying a little to each or by paying their unsecured balances rather than their secured ones. However, it may be possible to keep your home if you let some of the other obligations fall to the wayside.

    First, do the math. Subtract your mortgage and other essential expenses from your monthly income. If you can cover them, wonderful. Then get back on track by contacting your lender. Explain what’s going on and see if you can make up any back payments. After that, you have a couple of choices:

    • Set up a hardship plan. If you think your wife will be on the mend soon within a year and able to work again, ask the creditors to accept lower (or no) payments until that happens. Because you’ve kept your credit so clean up until now, you have a better chance of getting accepted than someone who has had a lengthy history of payment problems.
    • File for bankruptcy. There are two kinds for individuals a Chapter 13 bankruptcy and a Chapter 7. A Chapter 13 is a court-supervised payment plan where you get to keep your property, including a home, as long as you repay a portion of your liabilities. With the 7, you would discharge allowable debts, which can free up funds to pay your home loan. If the legal route sounds right, check with an attorney to determine which direction you ought to go.

    OK, now back to your score. A foreclosure certainly hurts it, but mainly because it’s preceded by a bunch of missed payments. Making lessor payments though the hardship plan or filing for bankruptcy also knocks the numbers down. But if you get to keep the house, a poor score would have no impact one way or the other.

    Even if you lost your home and had to rent, you’re hardly the only one going through such a financial disaster. Many landlords are understanding. And would you be a tenant forever? Who knows. Remain positive and do what it takes to make it through this tough time.

    I hope your wife recovers soon.

               

    Similar Posts:

    Share

    Post Comment

    Expert Q&A: Avoid Foreclosure by Prioritizing Needs

    Written by Tim Peak on September 25, 2011.

    Expert Q&A: Avoid Foreclosure by Prioritizing Needs

    Written by Tim Peak on September 25, 2011.

    Dear Erica, I’ve had great credit almost all my life and up until three years ago, never paid a bill late. But since my wife got sick and had to quit her job, we’ve struggled and now we’re facing foreclosure on our house. The last time I checked my credit report, we only had one late credit card payment, but we’ve had a bad couple of months and I suspect my wife has paid some late. I used to have a 700 credit score, but I’m guessing it’s going to be shot after this. What will a foreclosure and a couple late payments do to our scores? Are we going to have to rent for the rest of our lives after this? We’re both in our mid-50s. Tom

    Dear Tom, Stop obsessing about your credit score! I’m not saying it isnt important, but you’ve got far more important things to think about and do right now.

    Your wife is ill. She needs your attention and help, so that’s number one. I’m sure you know that, but it bears a strong mention to anyone else reading this column. There is simply no substitute for good health and when you’re sick, having loving people around you who do not focus on money or credit when youre around is key. If I were you, my first order of business would be to relieve her of bill-paying duties in the nicest possible way. She may want to hang on, but it doesn’t appear she can handle them.

    Of course, with her working days gone for the time being, the entire household’s financial burden has been placed on your shoulders. I hope you aren’t too hard on yourself for not being able to pay the mortgage and other expenses on your single paycheck. Most people would fall behind if they lost half of their combined income.

    What you must do now is prioritize. You have credit card debt as well as the house payment. Many people in similar situations try to do it all by paying a little to each or by paying their unsecured balances rather than their secured ones. However, it may be possible to keep your home if you let some of the other obligations fall to the wayside.

    First, do the math. Subtract your mortgage and other essential expenses from your monthly income. If you can cover them, wonderful. Then get back on track by contacting your lender. Explain what’s going on and see if you can make up any back payments. After that, you have a couple of choices:

    • Set up a hardship plan. If you think your wife will be on the mend soon within a year and able to work again, ask the creditors to accept lower (or no) payments until that happens. Because you’ve kept your credit so clean up until now, you have a better chance of getting accepted than someone who has had a lengthy history of payment problems.
    • File for bankruptcy. There are two kinds for individuals a Chapter 13 bankruptcy and a Chapter 7. A Chapter 13 is a court-supervised payment plan where you get to keep your property, including a home, as long as you repay a portion of your liabilities. With the 7, you would discharge allowable debts, which can free up funds to pay your home loan. If the legal route sounds right, check with an attorney to determine which direction you ought to go.

    OK, now back to your score. A foreclosure certainly hurts it, but mainly because it’s preceded by a bunch of missed payments. Making lessor payments though the hardship plan or filing for bankruptcy also knocks the numbers down. But if you get to keep the house, a poor score would have no impact one way or the other.

    Even if you lost your home and had to rent, you’re hardly the only one going through such a financial disaster. Many landlords are understanding. And would you be a tenant forever? Who knows. Remain positive and do what it takes to make it through this tough time.

    I hope your wife recovers soon.

               

    Similar Posts:

    Share

    Dear Erica, I’ve had great credit almost all my life and up until three years ago, never paid a bill late. But since my wife got sick and had to quit her job, we’ve struggled and now we’re facing foreclosure on our house. The last time I checked my credit report, we only had one late credit card payment, but we’ve had a bad couple of months and I suspect my wife has paid some late. I used to have a 700 credit score, but I’m guessing it’s going to be shot after this. What will a foreclosure and a couple late payments do to our scores? Are we going to have to rent for the rest of our lives after this? We’re both in our mid-50s. Tom

    Dear Tom, Stop obsessing about your credit score! I’m not saying it isnt important, but you’ve got far more important things to think about and do right now.

    Your wife is ill. She needs your attention and help, so that’s number one. I’m sure you know that, but it bears a strong mention to anyone else reading this column. There is simply no substitute for good health and when you’re sick, having loving people around you who do not focus on money or credit when youre around is key. If I were you, my first order of business would be to relieve her of bill-paying duties in the nicest possible way. She may want to hang on, but it doesn’t appear she can handle them.

    Of course, with her working days gone for the time being, the entire household’s financial burden has been placed on your shoulders. I hope you aren’t too hard on yourself for not being able to pay the mortgage and other expenses on your single paycheck. Most people would fall behind if they lost half of their combined income.

    What you must do now is prioritize. You have credit card debt as well as the house payment. Many people in similar situations try to do it all by paying a little to each or by paying their unsecured balances rather than their secured ones. However, it may be possible to keep your home if you let some of the other obligations fall to the wayside.

    First, do the math. Subtract your mortgage and other essential expenses from your monthly income. If you can cover them, wonderful. Then get back on track by contacting your lender. Explain what’s going on and see if you can make up any back payments. After that, you have a couple of choices:

  • Set up a hardship plan. If you think your wife will be on the mend soon within a year and able to work again, ask the creditors to accept lower (or no) payments until that happens. Because you’ve kept your credit so clean up until now, you have a better chance of getting accepted than someone who has had a lengthy history of payment problems.
  • File for bankruptcy. There are two kinds for individuals a Chapter 13 bankruptcy and a Chapter 7. A Chapter 13 is a court-supervised payment plan where you get to keep your property, including a home, as long as you repay a portion of your liabilities. With the 7, you would discharge allowable debts, which can free up funds to pay your home loan. If the legal route sounds right, check with an attorney to determine which direction you ought to go.
  • OK, now back to your score. A foreclosure certainly hurts it, but mainly because it’s preceded by a bunch of missed payments. Making lessor payments though the hardship plan or filing for bankruptcy also knocks the numbers down. But if you get to keep the house, a poor score would have no impact one way or the other.

    Even if you lost your home and had to rent, you’re hardly the only one going through such a financial disaster. Many landlords are understanding. And would you be a tenant forever? Who knows. Remain positive and do what it takes to make it through this tough time.

    I hope your wife recovers soon.

               

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