My mom is struggling

[Daddy]

My mom is a teacher. She was a stay-at-home-mom and part-time worker for so long. She will be 59 in Sept. and is in her 9th year of teaching. Here is her situation. She brings home about $3029 each month. She will be vested in the Georgia TRS after 10 years (in 2 more years). She has about $17k in a 403( .

 

 

Account Balance Interest

 

CitiMortgage (mortgage) $131,261.07 6.875%

Beneficial (2nd mortgage) 12,985.72 14%

Wells Fargo (CC) 540.83 14.99%

Wells Fargo (CC) 4,901.06 24.25%

Sears Card (CC) 1366.65 23.24

Sears Gold Master (CC) 397.98 23.24

Citifinancial (PL) 7,878.49 27.99

Nelnet (SL) 18,500 6.8

Direct Loans (SL) 6,418.09 ?

BB&T (auto) 2246.57 5.99

 

 

Bills:

Car Ins. $112/mth

Car gas 125/mth

Scana 60/mth

Georgia Power-lights 80/mth

Food 500/mth

Clothes 50/mth

Med/Dental Co-pay 50/mth

School activities/supplies 50/mth

Hair care 50/mth

Cell $70/mo

Cable $100/mo

 

 

I plan on calling all of her creditors this week and trying to get her interest rates lowered to 3.9-6.9%. These interest rates are absolutely KILLING her. I feel so bad for her. If they do not help her out, I was thinking maybe BK-7 would be a great option. She would be able to save so much money. She would be able to sock away at least $500 a month in her 403( , which is protected for BK. Should we first just try to negotiate lower rates? Then, if they don't work with her, should she just default? Would it be better to just default or to go BK, if the negotiations don't work?

 

 

Thanks a million!!!

[breeze]

First of all, try to get her rates lowered, and set her budget up, there may be some expenses that can be lowered, like cellphone plan and cable. See if there's any possibility of snowballing her credit card debt. If that's not possible, then start considering other options - also include any plans she might have - will she be needing credit for anything?

 

Also read up on bk qualifications and exemptions before you start talking bk.

 

Is she committed to letting you help?

[Daddy]

Breeze, thanks for your reply.

 

She is 1000% committed to letting me help. She will do whatever I feel is best for her, that's why I am doing the research.

 

As long as she can keep her home and car, that's all that matters to her. She does not plan on needing credit at all.

 

Thanks again!!!

[bostonte]

Approximately what are the mortgage and credit card / loan payments?

 

Can she at least afford the current minimums, or is it beyond that?

[Daddy]

Due to increase in taxes and insurance, her mortgage payment is now about $1450. Her 2nd mortgage is about $288. Right now, she is making only the minimums, but she still has a shortfall each month. Even if she didn't have a shortfall, with these interest rates, she would be in debt until she dies.

[sfbehr]

How much are the student loan and car payments each month?

 

Without them, she looks to be about $300-450 short a month at that point (assiuming her unsecured creditors want payments between 2-3% of the balance, which is fairly normal).

[Daddy]

Car is $298. SLs are about $250.

[radi8]

Due to increase in taxes and insurance, her mortgage payment is now about $1450. Her 2nd mortgage is about $288.

 

Has she looked into loan mods on the mortgages?

[gary4872]

How much equity does she have in the house? Can she use it to pay off all the CC debt?

[kashmac]

Car is $298. SLs are about $250.

 

Daddy, are you still trying to resolve this problem?

 

If yes then think about this.

 

Try to refinance the second and first mortage and roll them into 1 payment.

she should not be paying more than 1/3 of her income in mortgage payments.

 

Now she is paying 57.38%.

 

Seek out a credit union to refinance these at lower rates.

Also try to blance transfer all high interest cc.

 

I would pay off all cc balance below $500.00 .

 

She has 2. Use one to raise cash and the other to pay for gas ,car insurance

cellphone.cable,clothes,school supplies and power.

Cut cellphone down to $40.00 and cable to $20.00 per month.

 

Both cc must be paid off every month and repeat the cycle.

 

She could also look into getting a HELOC.

 

Try to stall paying back the student loans.

 

Pay the wf cc hi balance $100 more each month and charge the car payment

to this card.

 

Any questons?

 

Kashmac