Before Our Credit is ruined

Budget101 Discussion List Archives Budget101 Discussion List Before Our Credit is ruined

Viewing 0 reply threads
  • Author
    • #260967


      I lost my home a few years ago through foreclosure after I became
      disabled and my income dropped to a fraction of what it had been
      previously. Also, at the time, I owed an astronomical amount in doctor
      and hospital bills plus $37,000 in credit card debt which I could no
      longer continue paying. I was not even in a position where I could
      take advantage of their offer to settle the accounts for 1/3 of what I
      actually owed them.

      In my case, nothing damaged my credit as badly as
      the foreclosure did.

      I’ve since talked with several people who filed bankruptcy and were
      able to get new credit cards or other loans within 6 months afterwards
      so I’m inclined to think a bankruptcy doesn’t even trash your credit as
      badly as a home foreclosure. So in my opinion, if you’re going to
      allow your house to go into foreclosure, you may as well default on
      your credit cards too since struggling to make the payments won’t save
      your credit.

      But there are a few things to take into consideration before you make
      any definite decisions though. The mortgage company will sell your
      house for whatever they can get in a quick sell and if that amount
      doesn’t cover the payoff, they can sue you for the difference. The
      credit card companies will probably sue you as well and once a judgment
      has been put against you, the creditors will garnish wages, levy
      against any assets you may own and freeze your bank account.

      This is what happened to me. I had no income of any kind during the 6
      months it took to start receiving my disability and that was ROUGH
      enough but was nothing compared to the hardships I endued when my bank
      account got frozen without any warning. My disability payment was
      direct deposited into my account and I was not allowed to withdraw any
      of it.

      I had less than $4 cash in my pocket, car’s gas tank on empty,
      middle of winter and ended up homeless from December until the end of
      April. I was able to obtain a lawyer through Legal Aid to get my bank
      account “unfrozen” but it took several months and other resources I
      qualified for didn’t come through until much later. I’m living in
      government assisted housing now but I was on a waiting list for 21
      months before that came through.

      Just because there’s resources
      available in your city doesn’t mean you’re going to get help
      immediately when you need it so check on those things before you make
      any definite decisions about anything. Protect yourself as best you
      can by being well informed about all the possibilities of what could
      happen even though you’re sure it can’t or won’t.

      It might not be a bad idea to set up a free consultation with a good
      bankruptcy lawyer and see if there might be a particular chapter of
      bankruptcy that might allow you some debt relief and be a better option
      for you. I don’t have any personal experience with bankruptcy but I do
      know it won’t wipe out any judgments that were put against you prior to

      Having said all this, I take it you aren’t able to sell your house for
      what you owe against it? Or you don’t have an assumable loan on it
      where someone with good credit could have the loan transferred into
      their name? Have you talked to your mortgage company and explained
      your financial situation to them?

      They might be able to offer you some
      alternative solutions.

    Viewing 0 reply threads
    • You must be logged in to reply to this topic.

    Budget101 Discussion List Archives Budget101 Discussion List Before Our Credit is ruined