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Author: ajcmals Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308463  
Subject: Debts - USA Wife Married UK Husband Date: 12/29/2009 10:44 AM
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Hello All,

I have been using the UK version of fool.com (fool.co.uk) and perhaps there might be someone who can offer advice on our situation?

I have completed an SoA (used a UK site). I have used $ values so please ignore the GBP symbol.

I have put cars as $35000 value BUT these are both on Hire Purchase (bank loan for the cars - financed).

Here is our complicated situation:

I am from UK and she is from USA (Kentucky). We got married in May 2009, which is when I moved to USA. I now have a conditional green card (meaning if we got divorced within 2 years then i'd be deported), after 2 years I re-apply for my green card and basically prove we are still married etc., although I am not sure if bankruptcy would affect my permanent green card application...

I continue to pay all my UK debts in a timely manner by transferring funds to my UK account (about to change to XE.com rather than PayPal). Any money I have left over I use to pay my car, both our car insurance (SHE had a few wrecks in the last 5 years which affected our insurance although it should reduce in June 2010 we also shopped around but wasnt any cheaper), both cell phone bills and whatever else I can pay to help with our USA living expenses.

I also started a job 4 months ago in Group Benefits including Group Health Insurance.. I remember when I got my license that if you are bankrupt or declare bankruptcy you will lose your license.

My wife bought the house 5 years ago for $145,000. She has $122,000 left on the mortgage, which I think is an interest mortgage (I know NOTHING about mortgages here in the USA). We called a realtor a couple of months ago and he didn't recommend selling. He said the house would go for about $115,000 or less (upside-down)?

We have looked into renting an apartment for about $650 a month and selling the house... but then if we are upside down on the house what can you do?! We also heard about short-selling but they recommend you default for 90days before you attempt to short-sell.

Basically in a 'best case' scenario (with no catastophe's) we are -$300 on our bills each month. Which means my wife is getting further into debt. I do not have any US Credit Cards.

If you would like to take a look at our SoA then please do... we have identified some areas that we could perhaps reduce bills e.g. Cable, Internet, Cell Phone... but in the bigger picture would another alternative be favourable?!

Her car Payment $437 per month and my UK Loan will be over in 4 years time. So it's a question of struggle for the next 4 years with no fun or entertainment or seek alternative options... I am very sceptical about bankruptcy and the implications given our situation!

THANK YOU ALL FOR ANY WHO HELPS OR COMMENTS. MUCH APPRECIATED!

Statement of Affairs and Personal Balance Sheet

Household Information

Number of adults in household........... 2
Number of children in household.........
Number of cars owned.................... 2

Monthly Income Details

Monthly income after tax................ 2284
Partners monthly income after tax....... 2200
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 4484


Monthly Expense Details

Mortgage................................ 1000
Secured/HP loan repayments.............. 837
Rent.................................... 0
Management charge (leasehold property).. 90
Council tax............................. 0
Electricity............................. 50
Gas..................................... 50
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 10
Mobile phone............................ 168
TV Licence.............................. 0
Satellite/Cable TV...................... 115
Internet Services....................... 20
Groceries etc. ......................... 300
Clothing................................ 0
Petrol/diesel........................... 240
Road tax................................ 0
Car Insurance........................... 248
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 30
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 3198



Assets

Cash.................................... 1000
House value (Gross)..................... 115000
Shares and bonds........................ 0
Car(s).................................. 35000
Other assets............................ 0
Total Assets............................ 151000



Secured & HP Debts

Description....................Debt......Monthly...APR
Mortgage...................... 122000...(1000).....5.4
Hire Purchase (HP) debt ...... 35000....(837)......6.4
Total secured & HP debts...... 157000....-.........-


Unsecured Debts
Description....................Debt......Monthly...APR
His UK Loan....................16000.....450.......7.4
His UK Card 1..................14000.....350.......6.4
His UK Card 2..................7000......125.......15
Her Other Card.................2000......75........12
Her USA Card 3.................6000......75........15
Her USA Card 2.................7000......60........0
Her USA Card 0% ended..........15000.....303.......15
His UK Card 4..................1650......50........15
His UK Card 3..................6000......75........15
Total unsecured debts..........74650.....1563......-



Monthly Budget Summary

Total monthly income.................... 4,484
Expenses (including HP & secured debts). 3,198
Available for debt repayments........... 1,286
Monthly UNsecured debt repayments....... 1,563
Amount short for making debt repayments. -277


Personal Balance Sheet Summary
Total assets (things you own)........... 151,000
Total HP & Secured debt................. -157,000
Total Unsecured debt.................... -74,650
Net Assets.............................. -80,650




Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on The Motley Fool DWD Board with permission, using IE browser.
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Author: ajcmals Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294416 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 10:57 AM
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P.s. May I also add that my wife and I both have Student Loans.

My UK student loan is currently frozen until April 2010 when it will be reviewed. Otherwise I would pay approx $60 a month.

My wife's student loan is currently frozen until May 2010, by which time she might have to pay $400 a month!

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294417 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 11:21 AM
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Hi,

on a very cursory first pass through your budget, I've noticed a couple of areas that I have questions about.

I don't see property taxes. What kind of housing did your wife buy? Condo, co-op, house?

What's the Hire Purchase debt? (We don't use that phrase, so it's unclear). Is it a second mortgage?

Do you need both landline and cell phone?

Can you do without cable tv?

I'm not seeing anything for car maintenance. Even if you don't need it every month, you need to be ready for it.

No medical, no presents, no emergency fund, no wiggle room.

Is there anything you could sell? How active is the housing market in your area? Would you be able to rent the house out while you live in an apartment? Could you rent a room to someone? (The basis of getting out of debt is increasing your income, decreasing your outgo, or a combination of both. So you'll see other suggestions to cut back as well as suggestions to bring in more money).

I'll keep thinking, and I want to see what other people suggest.

Hang in there.

Nancy

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Author: determinedmom Big red star, 1000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294418 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 11:32 AM
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The two of you appear to have about $75000 in credit card debt evenly split between you. Why?

I believe the hire purchase debt is for 2 cards is that correct. That debt is almost 20% of your monthly income. Sell those cars and get cheaper paid for cars (sometimes called beaters).

Your expenses are unrealistic and don't allow for certain expenses very certain to occur such as medical or car maintenance, household maintenace and repair.

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Author: LaraAmber Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294419 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 11:32 AM
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Are you sure your vehicles are worth $35,000? Or is that the original purchase price? You mention a car payment, yet don't list that among your debts.

If you guys are running a negative that big each month, then you need to cancel your TV, or pull it down to the barest bones package that exists. Same thing for your cell phones.

Can either of you get a second job on weekends or evenings, even if just 10-20 hours a week?

Lara Amber

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Author: NiceI Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294420 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 11:35 AM
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You're right, you're down to bare bones and still not keeping afloat. I have been where you are-not as bad, but bad enough-and I'll tell you just a couple of things that stand out. There are others on this board who are way better than I am at budgeting, but here's my $.02.

First, the cell phone(s) have to go. If you're on a contract, sorry, pay them off and shut them down. You have a landline and internet, you're as wired as you need to be for now. Even the internet is questionable.

Next, learn to eat cheap! Not just "stop going out," but ~really~ learn to eat cheap. When pressed many years ago, I fed myself and DD for less than half of what you have for a food budget. Yes, Mac & Cheese, beans & rice, and Ramen noodles with an egg and frozen veggies beaten in get old real fast, but they're very cheap and can get you by for a long time. Chop $100 off your monthly food bill ~now~ and stick to it-that includes cleaning supplies, toilet paper, cat food, etc. Hopefully someday you'll dig out of this hole and can go back to eating healthy, nutritious food again.

Another thing some people will undoubtedly mention is cutting off the cable/satellite. I wouldn't unless you are extremely diligent (and by these debt loads, I don't think you can honestly say that), but I'd cut it down to bare minimum programming. The thing is, if you cut it off completely, you'll find other ways to entertain yourselves and they will likely be more expensive than the programming-sports events, going to the movies or renting movies (even Netflix), Karaoke bars, whatever. You have to ~stay home~ to stop spending money ~outside~ the home. Hey, take up cooking and spend the time inventing ways to spruce up Mac & Cheese in the cheapest ways possible-there could be a cookbook deal in there for you some day! :)

You don't say if your cars are upside down, but if not, 1 of them has to go. That'll cut down on your gas and insuance, too. Yes, it'll be a pain sharing 1 car and I can hear all the arguments against it, but you've got to make some sacrifice or that $300 a month will add up and overwhelm you in very short order if you don't stop the bleed now.

And really, $300 isn't that much. Working weekends at the car wash for a couple of years you could earn that. I know jobs are scarce right now, but take up baby sitting for parents who work night shifts while you're home, or something. It's possible, if you really try, to scrounge $300 a month up. Maybe not pleasant, but not impossible.

And whatever else you do, as newlyweds (I don't care your age!) I just gotta say.....NO KIDS!......NO KIDS!......NO KIDS! Until you get all of the unsecured debt off your shoulders and a good emergency fund tucked away, NO KIDS! :)

Good luck.

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Author: ajcmals Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294421 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 11:43 AM
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Hello All, thanks for your replies so far...

I'll try answer all your points!

First off a HP (Hire-Purchase) is basically FINANCE for a car. In our case we have both financed our cars. The finances although they went through the dealership are actually bank loans.

Our credit cards are not Hire Purchase. The reason why we both have debts (Loan and Credit Cards) is because we both had debts before we married. I am from UK and she is from USA. We only got married in May 2009, all of this debt is prior to our marriage. Like most if we had known then what we do now we wouldn't have gotten ourselves in this mess.

No we don't have wiggle room apart from the $1000 cash my wife has. We both have employer paid health insurance, although we do pay a small portion through our salary / wages but the amounts I have put into the SoA are after tax and health insurance. Our out of pocket limits are both $2500 each.

We live in a 2 bedroom detached house in a Condominium complex. I don't understand the whole filing taxes concept as I have never done it before but she once got $5000 back as a mixture of donations to goodwill and property tax back. Not sure what she will get this year. I think she got $3000 on property last year.

I have not allowed for car maintenance or anything. The SoA I submitted is 'best case' scenario.

The property market is SLOW where we are. She had her hosue up 2 years ago for 2 years with NO viewings. The Condo complex we live on still has development plots, so people could have a custom built house if they so wished to...

Thank You :)

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Author: determinedmom Big red star, 1000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294422 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 12:00 PM
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I have not allowed for car maintenance or anything. The SoA I submitted is 'best case' scenario.


Listen to me very carefully. I started doing budgets over 20 years ago. I consistently did budgets and then recorded all of my spending.

One would think, then, that I was doing well on my daily finances I was not. All of my budgets were best case scenarios.

But, life isn't best case. Life happens. So I ended up in huge debt, much larger than yours. Some of it was because of child related expenses, but a lot of it was from planning pie in the sky budgets.

Cars need maintenance, people need to go to the doctor, homes (even condos) need repair.

You do not get into credit card debt like you have through running a $300 a month deficit.

Have you been tracking your actual spending since you got married? Has your wife? How does it compare to your budget?

All of this stuff about cutting out cell phones, cutting TV, or cutting food costs is all fine. But, it is insufficient.

Your basic problem is that the mortgage, car debt, and credit cards are costing $3400 a month and your income is $4484. It is possible from what you say that the two of you are overwithholding for income taxes but even fixing that won't solve the problem.

Your budget is not going to balance unless you increase income or decrease debt expenses. The obvious debt expenses to decrease are the cars. Sell the cars. If you have to get a loan to pay off upside down cars so be it. Buy an inexpensive car and share, or use public transportation if possible. But you aren't going to get anywhere with those two car debts.

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294423 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 12:07 PM
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We live in a 2 bedroom detached house in a Condominium complex. I don't understand the whole filing taxes concept as I have never done it before but she once got $5000 back as a mixture of donations to goodwill and property tax back. Not sure what she will get this year. I think she got $3000 on property last year.

Property taxes are what the owners of property (real estate) pay to the town. The taxes help pay for police, fire, rescue, schools, roads, libraries, parks, and most other town expenses. They are generally paid directly from the property owner to the town, and are often billed twice a year. You need to investigate this. Fast. Before Friday. This Year.

I have not allowed for car maintenance or anything. The SoA I submitted is 'best case' scenario.

Did you see Star Trek II The Wrath of Khan? Captain Kirk said, "I don't believe in the no-win scenario."

I don't believe in the "Best Case" scenario. Car maintenance and health costs need to be planned for.

nice1 said that if you cut cable you will spend more money elsewhere, but not necessarily. Check your local library if you haven't done so already. They often have internet, newspapers, dvds, books, magazines, and lots of other things to do. If you aren't members, stop in and take a look.

If you're in a condo, are you allowed to rent out a room to someone?

Nancy

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Author: alstroemeria Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294425 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 12:53 PM
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Petrol/diesel........................... 240

Yikes, how far do you to commute and what kind of vehicles are you driving? Are you doing any unnecessary driving? Can you carpool with each other and/or anyone else? If you decide to sell a car and have a long commute, you can get an older Prius for ~$6,000--my husband drives an 02 and gets ~50 mpg, and it fits 4 adults, even my very obese brother and my very tall brother.

Since your wife has caused your high car insurance rates, maybe she should give up her car and even driving and use public transit. 3 wrecks in 5 years?? Does she have a drinking, drug or attentiveness problem? Is she texting/phoning while driving?

Gas..................................... 50

This is for heat/hot water/stove, right? Keep your thermostat at 60 at night and when you aren't at home and 65 when you are at home in the daytime. (I kept mine at 62 daytime and 55 at night when I had an infant and toddler at home in a drafty Victorian 2-family, and we survived--and wore sweaters or sweatshirts indoors in winter.)

Mobile phone............................ 168

I noticed that you're in sales--doesn't your employer provide free cell service for salespeople? Do you have a shared plan with your wife? or do you still use a UK phone number? Can you get lower-minutes plans and do more emailing?

Satellite/Cable TV...................... 115
Internet Services....................... 20


I'd ditch the cable/satellite TV altogether--get news, weather, and entertainment at much lower expense on the internet. You can even watch TV shows for free on your computer.

You & your wife combined earn about an average American household income, but with all that debt, you've apparently been living considerably higher on the hog. Sell any non-essential stuff. Got more than one TV? Sell the extra(s). A stereo and an MP3 player? Pick one. Got any furniture/housewares/clothes/clutter/books/CDs/DVDs you don't need?

Good luck!

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Author: Lea77 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294426 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 1:07 PM
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The car loans seem really, really high to me, so if anything could be done about them, that would be ideal. I know sometimes selling a car doesn't always work out well for folks, so I would leave that to you guys to determine whether that's feasible.

Obviously, you can cut phone/cable/internet down if you wish. When I started trying to do better with my budget, I got my bills lowered on a couple bills just by reducing or looking around for discounts (15% discount on my cell bill because of where i work!). I think I am going to look at my internet bill this year and see if that can be lowered.

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Author: ajcmals Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294427 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 2:03 PM
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Thanks to all for your input...

It's a scary thought having to live without 'simple' luxuries. In the past my wife and I have been more spendthrift! Even though are debt stems from living beyond our means, alot of my debt came from University. Even though I had a Student Loan I had to subsidise that with credit cards and a bank loan. Even though I worked I had to pay everything myself, which for 4 years got me in trouble. It snowballed and got worse from there. ANYWAY my wife and I have to focus on the future now.

I don't want to become bankrupt and this poses a moral issue for me. I have already contacted a firm in the UK specializing in bankruptcy from abroad they are going to call me tomorrow but I don't know if this really is the best solution. I have always paid my bills, like other people it could be deemed immoral and unfair to those who do pay their bills and get an increase in their interest because of people who declare bankruptcy.

I think my wife also needs to realise that we can't just declare bankruptcy and keep our cars and home etc., which is why I feel in a catch 22 situation. She seems to think she can eradicate her credit cards and unsecured debt and keep her car and home etc... not sure if this is the case, which is why she is thinking about seeking professional advice.

I guess my questions are related to decisions, do we:

1. Cut all our major outgoings e.g. Cable, Car, Phone etc
2. File UK Bankruptcy on my debts
3. File USA Bankruptcy on her debts
4. File bankruptcy on both debts
5. Carry on the way we are

I think I know what your answer is likely to be (point 1.). When you are in this much debt, it makes you jealous of people with less but have more money! Although I guess we can't be jealous because we got ourselves in this mess in the first place.

Regarding my phone through work I should start getting a $75 allowance from January after my 90 day period. I get my work e-mails etc. to my phone although I haven't used it a great deal for calls as yet. Regarding my car I would need that for work and visiting clients, but as yet I have not used my car for work meetings (get $0.50 per mile) as I have had my boss with me (who drove) to my meetings... anyway above all that my job in sales is tough right now. If I made more sales i'd get more commission and be able to get out of debt quicker... if we did declare bankruptcy i'd lose my license to sell insurance and lose my job.

Technically it's possible to get another job (provided there are any jobs out there) but emotionally it's a drain!

It makes me mad that people out there run up debt then go bankrupt and come out smelling like a rose! Then there is people like me and my wife who have made mistakes and try rectify them without bankruptcy and go through the struggle. My main dilemma is what to do going forward. Realistically what are the options.

My wife was spending more than she earnt before we got married. Whereas I started making ammends in UK (budgeting more) before I met her... one good thing since I moved here is that I haven't been able to get a credit card. Although we did get joint finance on the 2006 Nissan which I am paying. I can't afford to put items on a credit card so I don't. I'm not sure what the options would be in selling the Nissan and as we only had it 3 months I don't know how much it would be worth. We probably would lose out on some cash if we sold it (cars don't appreciate unless they are vintage!)

Would be interested to hear your further thoughts...

Do we cut our expenses now and hope things get better or do we just stop now and file bankruptcy if it's going to take forever to get out of debt?!

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Author: determinedmom Big red star, 1000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294428 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 2:22 PM
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It is possible depending upon the exemption laws in the state where one is located to keep a vehicle and a house after filing bankruptcy. Having said that, I don't really get the point of filing bankruptcy and keeping upside down houses (especially a condo) and cars. To keep them you have to keep the debt on them.

Bankruptcy in the US can be complicated and if your wife wants to consider it she needs US legal counsel. She may not be able to file Chapter 7 so may ending having to pay for quite a bit of the credit card bills, by the way.

If the car you bought 3 months ago is the 2006 Nissan while it won't have gone up in value it probably won't have gone down in value much either.

And, I gather there is also another car loan as well.

You need to look at numbers realistically. You can't do planning and budgeting based upon unrealistic best case scenarios. You need a plan that is based upon real life likelihoods.

Bankruptcy has consequences. I don't know anything about UK bankruptcy so don't address that. And if you have US debt I'm not sure how the UK bankruptcy affects that. You may need to consult US counsel as well.

With US bankruptcy, not everyone can file Chapter 7. So it doesn't necessarily wipe away all debt with no amount being paid on anything. Also it stays on the credit report for a very low time and may have negative consequences, some of which you already know about.

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294429 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 2:23 PM
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I think my wife also needs to realise that we can't just declare bankruptcy and keep our cars and home etc., which is why I feel in a catch 22 situation. She seems to think she can eradicate her credit cards and unsecured debt and keep her car and home etc... not sure if this is the case, which is why she is thinking about seeking professional advice.

An extremely fast google search located the Kentucky bankruptcy exemptions.

http://www.bankruptcyinformation.com/KY_exemp.htm

And it also appears likely that you would have to take Chapter 13 (the kind where you pay your debts back) rather than Chapter 7. The decision is based on a Means Test. Look down the list until you find Kentucky, then the 2 earner column:

http://www.justice.gov/ust/eo/bapcpa/20091101/bci_data/media...

And here is some more information:

http://articles.directorym.com/Reasons_to_Use_Chapter_13_Ban...

What I suggest you do is find a credit counseling office. This organization is the center for a nationwide group, and they can be relied on. Some of the other debt counseling agencies are frauds who can get you in more trouble, but this group is legitimate. And if you do decide to declare bankruptcy you would have to have a consultation with them anyway, so you aren't wasting your time.

http://www.nfcc.org/

They can help create a real working budget, work out arrangements with credit card companies to help lower your payments, and in general give you something to go on. And please make sure your wife understands all the consequences of bankruptcy; that she might be required to give up a lot of extras, including the new cars. This won't be a walk in the park.

And please let us know what happens.

Nancy

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294431 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 2:36 PM
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Oh. Something I nearly forgot. It sounds as though the two of you have been spending a good deal of money lately, particularly your wife. (The new car that is three months old was a tip-off).

When people file for bankruptcy the court takes a look at their spending habits. Many people run up a lot of bills very quickly and then file for bankruptcy. There is a name for this behavior. It's called Fraud.

Now, I'm not saying that the pair of you are con artists. Definitely not. But if it's possible that the court might come to that conclusion, then you really, really need to be careful. At the very least go on a restricted budget and make every effort to pay the bills down before you file.

Nancy

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Author: ajcmals Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294432 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 2:49 PM
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Nancy,

This is very wise. I told my wife that you cannot run up bills then file bankruptcy. I said as a safe bet we would need to be extremely froogle for at least 6-12months before we considered bankruptcy.

I will chat with her again this evening. I suppose I would need to talk to her about cutting cable, potentially internet and home phone first... then the pain that be getting rid of my car for a cheaper one (I wanted to get a banger in the first place but had no cash to buy one, which is why I went for finance).

I suppose if we made some radical changes now then we could revisit our situation in a few months time? We argue sooooo much about money and generally our unhappiness is due to our money situation.

Thanks again...

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Author: ajcmals Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294433 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 2:52 PM
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Also another question, do we try put the house on the market even though we are 'upside-down'?!

It seems as though there is no quick and simple solution. It seems like we have ro radically change the whole picture in order to turn things around without going bankrupt. Not sure how a discussion would go with the mortgage lender if we advised we wanted to sell because we can't afford repayments etc. and tell them we might file bankruptcy?

Would it be a good idea to write to our creditors (credit cards and loans) and try re-negotiate a lower rate ourselves?

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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294434 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 2:54 PM
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I said as a safe bet we would need to be extremely froogle for at least 6-12months before we considered bankruptcy.


I don't know much about bankruptcy, but it would seem to me that if you do have to declare it, then the court will impose a whole new level of frugality on you anyhow. I would think that regardless of what you do around bankruptcy, you'll need to be living frugally and well within your means to change the behavior that got you into this situation so that you don't fix it only to get right back into debt, something which is fairly common with folks trying to make these sorts of lifestyle adjustments.

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Author: alstroemeria Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294436 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 3:40 PM
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Would be interested to hear your further thoughts...

Since you need your car to call upon customers, I don't think it wise for you to drive a beater (a 2006 Nissan sounds just about right, unless it's their fanciest model or an SUV or minivan). On the other hand, someone with 3 wrecks in 5 years deserves to drive only a beater--if that.

I can't advise you on bankruptcy, but a friend is going through chapter 13 now. She has to pay back all debts, but they're held in abeyance for a year--she's trying to sell her house before the deadline as well as most of her stuff. Her car is a very nice minivan but 10 years old with no loan and won't bring in much, so she'll keep it. She just sold her fairly new laptop and printer and is trying to give away at least one of her dogs. I believe she is doing without cable TV now, and depending a lot on the kindness of friends (I paid for her bankruptcy filing and have her over for dinner or take her out to lunch and/or movie regularly, as do others. I made her a several month supply of homemade granola as she used to eat breakfast out most of the time, and my brother meets her at a local sports bar to enjoy The Game, and he pays for her drinks & dinner even though they aren't dating or anything). My friend is living on $1000-1500 a month, depending on how sales of stuff goes. She's looking for work at age 59 after not having worked for ~15 years. So...you are definitely not alone in facing hard times.

Does your wife have family nearby that you could live with for a while if you sold/rented out her condo? Maybe if you provided chores such as housecleaning, babysitting, cooking? My brother had a house fire a few months ago and is now living with us. It's kinda fun, actually, but he's pretty low-maintenance.

It makes me mad that people out there run up debt then go bankrupt and come out smelling like a rose!

I think you have an unrealistic view of it. Going through bankruptcy is very painful. My friend needs Court permission to spend any money. She has to account for every penny of income (from selling her stuff and eventually her home). FOr example, she will not legally be able to pay me back the $1000 I gave her (that's OK with me, though). Any income above subsistence level goes to her creditors.

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Author: determinedmom Big red star, 1000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294439 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 4:26 PM
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I think you have an unrealistic view of it. Going through bankruptcy is very painful. My friend needs Court permission to spend any money. She has to account for every penny of income (from selling her stuff and eventually her home). FOr example, she will not legally be able to pay me back the $1000 I gave her (that's OK with me, though). Any income above subsistence level goes to her creditors.



This depends very much on what type of bankruptcy one can file. A Chapter 13 does subject one to much scrutiny and a court imposed budget. A Chapter 7 is more of a liquidation of non-exempt assets and doesn't have that kind of repayment and budget obligations.

To the OP - Your wife would really really have to know whether she could qualify for Chapter 7 or would have to go to Chapter 13. Based upon everything you have said, reading between the lines, I don't get the idea that your wife is very keen on the idea of living frugally and staying within a strict budget. If she has to file Chapter 13 I suspect she won't much like it.


As far as the car and customers. I understand the reason for a reasonably nice gar if you are driving customers around. On the other hand, I have the impression you are an insurance agent so do you really drive many customers around?

I do get the idea that you and your wife may not be entirely on the same page. You aren't going to get far with solving the financial problems unless you are on the same page.

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294444 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 4:58 PM
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I am surprised you didn't sit down & map this all out before you got married, but here's my take:

1. You have way too much car. Get rid of it through whatever means possible and get a beater. You have more car than I have spent total in my LIFETIME of buying cars, and my income is more than yours. This is draining you dry and you simply cannot afford it.

2. For someone on a tight budget you are spending too much on TV and cellphones. Get rid of cable completely and cut back to a more basic cellphone.

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294445 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 5:10 PM
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Quick comment. From your first post:

She has $122,000 left on the mortgage, which I think is an interest mortgage.

Could you check on this? All mortgages have interest, but you should ask if this is a fixed rate mortgage, or if she has a reset, or a variable rate.

Nancy

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Author: determinedmom Big red star, 1000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294447 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 8:34 PM
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She has $122,000 left on the mortgage, which I think is an interest mortgage.


I wonder if he means that the payments are interest only?

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294448 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 9:53 PM
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I wonder if he means that the payments are interest only?

That's what I was wondering. And why I asked for more information.

You know something? It's scary reading sagas like this.

Nancy

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294450 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/29/2009 10:47 PM
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Also another question, do we try put the house on the market even though we are 'upside-down'?!

Your wife needs to ask her mortgage servicer this question. They may be willing to do a short sale, which is where the lender forgives the difference between what the house is sold for and what is owed. It is likely that your wife will have to qualify financially for this with the lender, as in having no other assets to pay the deficiency from.

The short sale will have bad repercussions on her credit score, but probably not as bad as a foreclosure or a bankruptcy.

It seems as though there is no quick and simple solution. It seems like we have ro radically change the whole picture in order to turn things around without going bankrupt.

Yes.

Not sure how a discussion would go with the mortgage lender if we advised we wanted to sell because we can't afford repayments etc. and tell them we might file bankruptcy?

There are several options that might be available, but since your mortgage payment is already about 22% of your household income (significantly less than the 'affordable' 31% allowed through the government's modification programs) and the debt that is causing you issues is your consumer debt, it is unlikely that your wife would qualify for a mortgage modification.

That leaves a short sale or a deed in lieu of foreclosure - where your wife would give the property to the lender and they would forgive the debt.

Note - if your wife applied for a mortgage modification on her own income, she probably would qualify. However, this could be considered fraud, and she would potentially be eligible for criminal prosecution. This is because the income requirements are supposed to reflect 'household' income.

Would it be a good idea to write to our creditors (credit cards and loans) and try re-negotiate a lower rate ourselves?

You can try asking for 'hardship' programs, but be sure you understand the details and consequences - many programs only last a specified number of months, some lenders require that the accounts be closed if you are on a hardship program, and some lenders report to the credit bureaus as being on a payment plan, which can have negative effects.

AJ

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Author: ajcmals Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294454 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 9:08 AM
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Hello,

Thanks all for your replies. With regards to the mortgage I will ask her this evening and perhaps get the paperwork to find out exactly what's what.

She called them a few months ago and asked about short-selling, they said she should probably default for at least 3 months before they'd condsider a short sell. One thing for sure is we DO NOT want to get ourselves in any legal trouble!

The cars... yes we both have a car each (on finance). My wife (before I met her) had 3 cars in 5 years and ended up upside down with the old loan tagged onto her new car. I don't think it would be viable to get rid of her car because we'd be too upside down.

With my car, as I recently got it, it would be more feasible. If I sold privately i'd have to come up with $3,000-$4,000 to pay the short-fall of the loan and I think it would have to be right away. I spoke to my bank and they suggested a trade-in for a cheaper car, that way I don't have to pay the short-fall right away and can continue making payments. It's not particularly easy though!

With regards to first steps we cut our homephone line and internet. We reduced our service on cable but we decided to give ourselves some grace because we NEVER go out!

Regarding phones I think for now we will keep bearing in mind our joint bill of $168 will go to about $100 when I start receiving partial payment of $75 from work in January. Also we'd have to pay penalty fees to dramatically reduce service and get 'non-3g' phones.

My wife is still planning to speak to a lawyer to find out where she stands... the first consult is free. I am seeking advice about bankruptcy back home from a specialist bankruptcy from abroad company BUT I am still very sceptical about bankruptcy!!! So I won't be making any rash decisions just yet.

Food, we shop on average once every 2 weeks. We decided to eat what's left in our pantry and fridge. Then it's probably ramen noodles and eggs for a while!!!

My wife was in tears last night and I seem like 'the bad guy' but we need to make a change. My next target is getting rid of my car and haven't decided how / what to do about that.

I think the house situation would be difficult right now especially as we'd be upside-down on any sale AND we haven't yet defaulted...

Thanks again :)

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Author: ajcmals Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294455 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 9:22 AM
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Ok catch-22 situation... just called Chase again to check what we'd need to do to sell the car... and the representative told me something different. The first person misinformed me!

Basically chase won't release the title for up to 10 business days once the car is paid off. What private buyer is going to want to pay for a car and not be able to take the car that day?! Also trade-in they won't want to buy a car unless they have the title. If I traded the car in i'd still need to pay off the car in full and the title won't be released until that's done?! So looks like not only will we find it difficult to sell the house, but the car too!

Maybe I should just default and leave the car at a chase bank with the keys?!

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Author: Minxie Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294456 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 9:32 AM
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Basically chase won't release the title for up to 10 business days once the car is paid off. What private buyer is going to want to pay for a car and not be able to take the car that day?! Also trade-in they won't want to buy a car unless they have the title.


That's the way it's done here; they hold the title to ensure the funds are good. I'm fairly sure that it wouldn't be a problem trading your car; lots of people are upside-down on their cars because they didn't pay off their previous car.

Minxie

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Author: ajcmals Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294458 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 9:37 AM
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One word - "Screwed!"

Now I don't know what to do! :(

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Author: Minxie Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294459 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 9:59 AM
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You are not, as you so quaintly put it, "screwed". Lots of people buy cars in which they are upside-down because they traded in a previous car. That previous car wasn't paid in full; the unpaid amount is added to the new car's loan.

If you still have excellent credit, you could consider refinancing your house and cars. With the interest rates currently very low, you might be able to lower your payments enough to create a positive cash-flow.

Other things you need to consider: your utility bills don't seem accurate. You have both your electricity and gas at $50/mth; that is very low, especially as I am reasonably sure you all do not keep your thermostat set at 55 deg F (hi, tconi! ;-) I am not especially frugal but reasonably so; I keep the house at 60 deg F when we're not here and usually 68-70 when we are (recent transplantees to the North from the South and "we'll never be warm again!") Even so, my gas bill is about $78/mth; it's a luxury for which I pay by not having cable. :-)

Speaking of which, the cable company has a very basic plan for about $13-18/mth; you could use that OR you could buy a digital TV converter and antenna. My ex set up one of these for me this past week so we could have some television channels. His total cost was probably about $50-75 to do so but it was a one-time cost.

If you can't decrease your expenses, you MUST increase your income. You can pick up an extra job, even if it's something as simple as posting your services on Craigslist. Lots of people will pay you $10/hr to do something they just don't want, or don't have time, to do. Yes, it's not steady but it is an income. Also you should be selling everything you can.

Do you all have an emergency fund (henceforth referred to as "e-fund")? If not, you should probably set aside $1k for EMERGENCIES; emergencies are NOT things like we're out of milk or even oops, I forgot to pay the water bill and they're here to turn off our water (you can pay that the next paycheck or sell some blood or something). This is only for the ABSOLUTE most important EMERGENCIES.

A friend of mine recently went through a Chap 13 bankruptcy and if you think your budget is tight NOW, you are in for a RUDE wake-up call. She had to account for every expenditure, no matter how small, and ALL of her spare cash went to her creditors.

You all need to get a handle on this now so the first thing you need to do is to figure out exactly where your money is going. Get a piece of scrap paper and write down every day every expenditure; pack of gum, house payment, coffee, water bill, EVERYTHING. After you have done this for a month or two, you will see where your money is headed and be able to turn the tide.

Minxie

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Author: ajcmals Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294460 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 10:06 AM
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Thanks Minxie,

There is clearly a mountain to climb!

I think the first step is 'The Wake Up Call' and last night was our discussion and realisation that we need to CUT things.

I have heard this about Chapter 13, so it's not favourable.

That's a good idea about Craigslist, i've never used it but I don't think i'm good enough at anything to offer a service. Could be worth a try though. Increasing income? Well if I got more sales at work then i'd be on the road to success... I have been working very hard recently and all the deals I almost closed collapsed (not personal) - that could have been a $1000 bonus and an extra $500 a MONTH!!! Just not having much luck at the moment.

I might start applying for extra evening or weekend work then, even though jobs are very scarce around here.

Thanks for your post, appreciated.

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294461 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 10:11 AM
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Agree with Minxie - your budget isn't realistic. You have some glaring holes. No clothing - really? I'm on a tight budget and even I have to replace worn-out shoes and the like. No car repairs? No home repairs? No transportation/travel aside from the car? You never take a bus, a cab, or a plane? Start tracking all costs today - to the penny (both of you need to do this). If you don't have the knowledge, you can't solve the problem. I guarantee you that you are spending way more than $300 over income. How much you need to determine, and then make a plan for.

You have no way of making this work without getting rid of the cars or the house, or both. Or getting second jobs. But the good news is you CAN do this. If you get good info (track expenses), make a plan (budget), and make some hard decisions, you can get this solved. But it won't be easy and you both have to get on board with it. Is your wife committed to it, as you are?

I agree that with your immigration status you want to avoid all possibilities of getting sued by creditors, so better to make a plan now.

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Author: ishtarastarte Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294462 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 10:15 AM
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That's a good idea about Craigslist, i've never used it but I don't think i'm good enough at anything to offer a service. Could be worth a try though.

Let's see, . . .

Shovel snow?

in the summer help someone with some landscaping? My stepfather used to work 2-3 jobs all the time. We lived in FL and both of our immediate neighbors were snow birds (meaning they only came down in the winter and lived somewhere else in the summer). He took care of their lawns and trees year round for a little extra money. Not much skill required (especially when he had me or my sis mow the lawns.)

handyman work?

I tutor math for middle school & high school kids.

Ishtar

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Author: Minxie Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294463 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 10:22 AM
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That's a good idea about Craigslist, i've never used it but I don't think i'm good enough at anything to offer a service.

Believe me when I tell you people will hire you to do stuff like shovel out their driveways or organize their bookshelves or move boxes from one floor to another. You could be a petsitter or a housesitter or a babysitter. You could water plants or walk dogs or clean litterboxes. You could rake leaves or shovel snow or transplant bulbs. You could take out the trash or cook or run errands for someone who is housebound.

Think of what you can do and market yourself accordingly. After all, you are a salesman; sell your skills.

Minxie

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Author: GuildWarsQueen Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294464 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 10:32 AM
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That's a good idea about Craigslist, i've never used it but I don't think i'm good enough at anything to offer a service.

Offer to go to someone's house and pick up dog poop or clean out their litter box(es).

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Author: LaraAmber Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294465 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 10:38 AM
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There is a ton of stuff you can do. A lot of college students earn extra cash by answering craigslist ads for people looking for someone to help them move, install sod, paint a room, etc. It just requires you being willing to sweat to earn some cash. Also look at a temp agency or catering firm. They need people for special events like setting up chairs, putting up lights, etc. Factories and sorting facilities need people for night crew.

My dad worked 3 jobs while in college on scholarship with a pregnant wife. One of them required him crawling into giant vats of pig manure with my mom up top talking to him to make sure he didn't pass out. Believe me there are jobs out there. They might not be glamorous, they might have weird hours and wear you out physically, but they exist.

Lara Amber

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294466 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 11:29 AM
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The cars... yes we both have a car each (on finance).

When you say that you have 'a car each (on finance)' - who is on the titles for each car - you, your wife, or both? Who is on the loan for each car - you, your wife, or both?

The reason I ask is because according to the Kentucky bankruptcy rules that Nancy gave a link to, KY only allows one car in BK. If she is on both titles (which she probably is, if she is on both loans), you may have to get rid of one of the cars as a condition of the BK. If that is the case, I would definitely say you should give up the car that you are most upside down on (apparently hers, from reading the rest of the thread).

Your wife needs to speak to a BK attorney to find out exactly how this is handled in KY - but I know of someone else who is attempting to file for BK (in another state) who is being advised to get rid of 2 of their 3 cars before they file, as they are only allowed 1 car in their state.

AJ

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Author: dswing Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294469 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 12:06 PM
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Hi,

I won't add to the excellent stream of advice here in this thread, except to give you an idea of what we have done to get out of debt in our household (husband, wife, new baby, dog, cat, $60K+ debt).

1) Sold one of our two cars. I have been taking bus to work for 1 year now, with no sign of stopping.
2) Remaining car was purchased used, and was 9 years old. Now 11.
3) Took a vow to not buy anything new for 1-year http://sfcompact.blogspot.com/
And probably will commit to do this again in 2010.

4) Sold many possessions. Especially those related to hobbies, such as sporting equipment, gadgets, etc. We sold gifts we gave each other at past holidays. Oddly, there is still a lot we could sell... where does this stuff come from...

5) Went to a shared cell phone plan. No land line.
6) No cable. Bought an HDTV antenna and put it on the side of the house. Free TV, if channels are limited (there are still more than 10, and almost 20 if I want to watch programming in Spanish). Tons of shows can be watched online for free as well, if you want to hook your PC to your TV.

7) Cancelled all other subscriptions and memberships, except internet, which is critical to both DWs and my ability to work - I don't pay extra for higher-speed.

All this, and many other things I am forgetting. And still the debt is not going down as fast as we would like. But it has been cut almost in half in a year.

~dswing

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Author: EarlyToRise Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294470 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 12:13 PM
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All this, and many other things I am forgetting. And still the debt is not going down as fast as we would like. But it has been cut almost in half in a year.

~dswing


Dave Ramsey would call this "sacrificing to win." I applaud and salute you. Keep up the good work!

ETR

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Author: ajcmals Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294475 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 12:48 PM
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Thanks for your reply.

So about the car you sold? Did you have finance on it? Were you upside-down?

We have worked out that we'd have to come up with at least $3000-$4000 to pay off the auto-loan if we sold the car privately. And as you have read above title not released until paid, private owner (probably) won't pay until they have the title. Then of course trade-in...

With our house, phones etc., we have contracts and contracts are put in place so you can't just quit paying without a penalty. So I don't see how we can cancel the contracts when we don't have upfront cash to terminate them.

If it was as easy as selling the home (upside-down) and moving in with the in-laws or renting CHEAPLY then we WOULD! But there seem to be so many constraints I don't know how we would do that, which is what frustrates me.

THANKS!

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Author: LaraAmber Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294479 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 1:27 PM
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You will find with something like a phone people make excuses "well if I cancel my contract they will charge me $200!!!" So freaking what? If, for example, your phone costs you $150 a month now, and if you cancel and go to a prepaid phone for $20 a month, it takes you two months to recoup the cancellation fee. But all people focus on is that cancellation fee.

So find out the cancellation fees and calculate how long it will take you to recoup the cancellation fee.

For the auto loan you are ignoring something important. Yes the loan holder wants the entire balance paid right at the time of sale. So? That doesn't preclude you from getting a signature loan for the difference and paying them off that way. Now you have a signature loan for $3,000 vs. a car loan for $20,000. Yes you still have debt, but you just cut it by quite a bit. Yes, it means public transportation and being a one car family. But you need to feel some discomfort after getting yourself into this mess.

Stop thinking about why things won't work. Figure out how you are going to MAKE THEM work. You got yourself into this mess, you CAN get yourself out of it. You'll be surprised with what you can accomplish when you combine critical analysis, a positive attitude, and some plain old fashioned tenacity.

Lara Amber

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294480 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 1:45 PM
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Contracts are there to make you THINK you are better off sticking with them than canceling. Sometimes that is true, but often it is not. If you have the $$$ to pay the monthly bill, you have the $ to pay the cancellation fee. Probably.

Cellphone contracts are often pro-rated. So if you cancel a contract at the 6-month mark and it's a $200 penalty you would owe them $100. If you keep the lowered contract for a year that's a less than $10 difference a month to break even. And many companies let you shift to a more basic plan with no penalty (just a re-start of the contract clock). I would look into this as it could be a big savings, even with the penalty. You would need to run the numbers though.

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Author: determinedmom Big red star, 1000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294487 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/30/2009 3:52 PM
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Cellphone contracts are often pro-rated. So if you cancel a contract at the 6-month mark and it's a $200 penalty you would owe them $100. If you keep the lowered contract for a year that's a less than $10 difference a month to break even. And many companies let you shift to a more basic plan with no penalty (just a re-start of the contract clock). I would look into this as it could be a big savings, even with the penalty. You would need to run the numbers though.


Both of these points have been true in our experience. We did once reduce the minutes on our plan and it started a new contract period but there was no penalty. Also, recently we were told the cancellation amount on our plan and it does reduce each month. In many instances it can be worth it to cancel and pay any penalty depending on the amount of the penalty versus amount saved.

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Author: RayKinsella Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294506 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/31/2009 9:14 AM
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You'll be surprised with what you can accomplish when you combine critical analysis, a positive attitude, and some plain old fashioned tenacity.


LaraAmber added to your Favorite Fools list

Awesome advice that works in all facets of life.
Ray

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Author: dswing Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294527 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/31/2009 4:02 PM
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So about the car you sold? Did you have finance on it? Were you upside-down?

The car we sold was paid off. I originally financed half of it when I bought it used. Sold it 10 years later for 50% of what I paid for it.

So, that doesn't help you much. It sounds to me like you have to raise some small amounts of cash first, in order to be able to extricate yourself from your too-expensive contracts and leases. So for me, that would mean:

1) Sell stuff
2) Make some "side money" from doing odd-jobs


Best of luck to you. It isn't easy, but it can be done.

~dswing

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Author: dianakalt Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294537 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 12/31/2009 10:39 PM
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Believe me when I tell you people will hire you to do stuff like shovel out their driveways or organize their bookshelves or move boxes from one floor to another.

Abso-friggin-LUTELY.

This week, I had a significant need to have my sidewalk driveway shoveled. We got almost a foot of snow, and I have a bad back so I have a very hard time shoveling it myself and I don't own a snowblower. I called umpteen places looking for someone to do it - most of which don't do single residential jobs. The one person I found who did to single residential jobs was booked solid for 2-3 days so I couldn't get him.

I would have paid good cash money to someone for this service.

And over the next year, I would pay good money for someone to help schlep belongings from one floor of my house to another or to get things taken to goodwill that I plan to donate.

There is market for this. I promise.

d

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Author: PipneyJane Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294553 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 1/2/2010 7:49 AM
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Hello.

I've just got a couple of points to add to all the good advice you've been given:-

1) Track your spending. Write down every penny you spend for a month and then analyse it. Get your DW to do the same. This information is vital for identifying where money is leaking and which leaks you can plug. Next month, repeat the process but give yourself a small spending allowance to stick to. Check out this post on living on a cash diet: http://boards.fool.com/Message.asp?mid=12478487

2) If you haven't received your Christmas presents yet from the UK, or if your family don't know what to buy you for your birthday, ask someone to track down a copy of How to feed your family for £5 a Day (or the £4 a day version, but this one is better). It will give you some cheap, filling, healthy meals to live off as well as a pep talk on frugal living. The book is out of print, but regularly comes up on Amazon.co.uk.

3) Speaking of frugal living, check out this series of posts by TamarianG: http://boards.fool.com/Message.asp?mid=19672026&sort=who... . I've linked to the fifth post in the series; Tamarian gives you links to the previous four.

4) If you spend any money on anything at all this month, make sure you spend it on a copy of The Complete Tightwad Gazette and read it from cover to cover. Again, you are looking for inspiration and mindset modification - you don't have to slavishly follow every idea the Frugal Zealot comes up with. You can borrow this book from the library, but it is the one book I'd rescue if the house was burning down.

5) Reality check time: you have health insurance through work. Take a look at the fine print on the policy - just because it's "insurance" doesn't mean it pays for everything. Many, many people here report co-pays of thousands of dollars every year. Budget for it.

- Pam

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Author: TchrP Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 294554 of 308463
Subject: Re: Debts - USA Wife Married UK Husband Date: 1/2/2010 8:30 AM
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How to feed your family for £5 a Day

Tip: a search for this title on Amazon UK seems to work better if £5 is spelled out as Five Pounds, even though the cover reads £5.

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