I own home at 5.75% & have 2nd & lots ofcredit card debt. 2 dings on 2nd. shd i file B or take final 40g of eq

Question

i recently purchased home with 2 loans. The first is at 5.75%.The second is at 6.75%. I have alot of credit card debt. I am strapped financially. I have 40,000 left of usable equity in my 2nd (leaving 10% in). I recently have 2 deragatories on my credit rating for my 2nd. Should I take out the remaining $40,000 in my 2nd and consolidate some of my debt, pay outstanding taxes due and try and hammer away at the rest of the debt slowly. Or should i protect my equity in case of emergency job loss, declare bankruptcy and protect my home. Please help. I am about to sign on the dotted line out of desperation for a loan that will charge 10points due to poor credit. My sense is instead of pulling more equity...to move toward bankruptcy and save equity for emergency in case of job loss. My current credit card, and tax debt is 60,000(16,000 due to IRS which bankruptcy will not pay for). Not including my home of course.

Answer 1

The only missing variable in this puzzle is your income. Not enough info to really give a good answer. If you have a good income I don't think bankruptcy will help much. You won't qualify for chapter 7, and with that much home equity and income you will be paying a lot of money into your "plan".

You really need to have an attorney look over your situation, run the numbers and figure out what your options are.

From the little info you give, I would work on a two-pronged attack. See if you can negotiate a lower balance on the credit cards, borrow against your equity (lower interest rates and it's tax deductable), and for gosh sake get control of your budget!

If you file bankruptcy, they are going to put you on a terribly hard budget anyway. So if you plan to avoid it, you need to sit down and make a very serious budget. No more entertainment or fun stuff. Forget the morning Starbucks! Take your lunch.

Answer 2

Take a deep breath and step back.

Can you see the downward spiral?

First, you acknowledge that there is an inner voice telling you that you should not be taking the EARNED equity inside of your home and refinancing it --ESPECIALLY when the lender will be "graciously" charging TEN POINTS to consummate the loan in question.

Second, the fact that you already have 2 dings on the 2nd mortgage is a clear red flag that you are struggling with the current 2nd mortgage -- so refinancing an unmakeable 2nd mortgage only further exacerbates the problem here.

We are trying to end the spiral -- NOT LENGTHEN IT. There is no need to rearrange the chairs on the deck of the Titanic.

Third, you owe Uncle Sam big time, which tells me that you probably need a real professional tax accountant (and not just the H&R Block guys) who us regular folk deal frequent for our tax situations. You need a LICENSED CPA who has experience being your advocate when dealing with the IRS! Call the respective state board of accountancy to verify that the person you are dealing with is currently licensed and has NO DISCIPLINARY ACTION against him/her.

Fourth, if you are thinking about filing for bankruptcy to alleviate some of the pressure, then you (and your boo) need to seirously consider Consumer Credit Counseling (CCC) before the Big B. It is the last stop BEFORE BANKRUPTCY to get your financial house in order and I must confess, if you are seeking value-added advice from a bunch of morons on Yahoo Answers!, it is time to acknowledge the gravity of this situation. You (and your boo) should go to CCC.

Fifth, you need to take inventory of this situation. Dude, you are in way too deep. If you wifey or girl is involved in some of this debt it is time you stop being politically correct in the relationship and its time you start being real with one another.

Establishing a budget and LIVING the budget and HONORING the budget will, on a bad day, keep you far away from the scenario you have described. You are emotionally and physically drained because that it was debt does. The debt itself is the weed that wrecks havoc in your life. You (and your boo) need to attack the roots of the weeds and get to the source of your out-of-control spending.

You just don't luck up on $34,000 of credit card debt.

That kind of debt is built one purchase at a time compounded with interest over time. You have to analyze your actions and habits and identify what purchases you (and your boo) have made over the long haul that you have led you to the precarious situation. You have to BREAK THE PATTERN to find some semblance of freedom and hope. Are you values telling you that you have to use credit cards to this extreme?

Finally, it is not a good idea to take unsecured debt and convert it over to your home because you could then lose your home if you don't make the payments. In other words, DO NOT TOUCH THE HOUSE! You don't want to be homeless in today's America.

Answer 3

Have you considered talking to one of the Consumer Credit Counseling Services??
Bankruptcy is usually the very last resort, and your credit will be damaged for a very long time. Also, all of the advisors will tell you to take that equity and pay the debt down, but why get deeper in debt than you are now?
Talk to the counselor!

Answer 4

Notes from the Dead, That’s what it said, On the front of the box that I found, A foot long in length, and with all my strength, I pulled it out of the ground On op’ning it up, and peering inside, I saw page after page after page, Spidery writing, on parchment that was Coloured entirely yellow with age, I picked up the paper, and froze to the spot, As I read the Notes from the Dead, How could it be? Addressed to me! How could it say what it said? In shock and horror absolute, My heart slowed and then stopped, And the paper I was holding, Flew back into the box, As I collapsed, time elapsed, The box had done its trade, I had died – was trapped inside, Another note was made. lol, that was random. This whole thing is a good idea ^_~

Answer 5

Contact a credit counselling agency, they are free and will ease your worries, you will be glad you did.

Answer 6

SAVE THE EQUITY....its your only out....good luck.