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Please help me to decide what to do....

post #1 of 55
Thread Starter 

Goodness I'm a nervous wreck even typing this message.  Things are BAD.  My husband is disabled and gets disability but is looking for a job now.  I'm not sure how this will go; he hasn't worked in 10 years and I don't think he will be able to do it :(

 

I have a part time job in which I make little money. I am looking for more work, hoping to get something at night which is going to be the death of me, but oh well. (I have 4 kids, 2 little ones not in school yet).  

 

My debts are outrageous and I haven't paid taxes on my house in over 2 years.  I'm FREAKING OUT.

 

I'm already getting food stamps, wic, and heap, thank God!  I'm as frugal as I can be, but I thought I would come on here for more ideas as I haven't been here in ages, I've been so busy!  (I miss MDC!)

 

I have been pondering the following idea, but I really need outside advice, so here it comes, finally....

 

I own my house - no mortgage.  I am thinking about selling it.  I don't think I would get more than 120K from it, but it would be mine.  I am worried though, about finding a place to live.  I will not, neither will my husband, qualify for a mortgage.  I would have to rent.

 

My debts total nearly $50K.  If I paid them all off, I would have $70 left.  What would be the best thing to do with that?  I would need some of it to live while I'm in this employment limbo, but I want to put some aside for a future down payment while I get my credit back in order and can get a mortgage.

 

So that's the idea, although I have another slightly crazy one - selling the house to a family member, living in the house, repairing my credit, and keeping a huge sum of money in a savings/money market account to pay the mortgage for my family member with the interest.  So far no one is willing to do it.

 

Please give me your best advice!

post #2 of 55

Selling the house and paying off debt doesn't sound like a good plan to me.  You need to find out what the ramifications of not paying your property taxes are first.  In the meantime you have a free place to live and eviction and/or tax sales are probably a last result for a town.  Bankruptcy might clear your debt anyway.  I believe that you can usually keep a house under a certain value even in bankruptcy.  And you didn't mention getting any social services - have you applied for anything and everything you might be able to get?  Sometimes with a disability, allowable income levels are higher.  With no debt payments and maybe some food stamps or WIC or energy assistance, you might quickly find yourself in a much, much better place.  You really need to find out what will happen with the property taxes first.  Losing a house of that value would be horrible, of course.  Is it possible to take a small mortgage on the house to pay the taxes? 

post #3 of 55
Thread Starter 

Thanks for the reply - this is not just to pay off debt.  Things are BAD.  We are flat broke 3 weeks out of the month and can't afford necessities a lot of the time.  I have to borrow money from my mother, often even to pay bills.  I can't stand it anymore.  I'm trying so hard with 4 kids and do 90% of the work all by myself.  I have to go to my mother for new clothes for my kids.  I haven't bought new clothes for myself in 3 years....uugghh on and on.  I don't want a pity party, really.  I just need to know what to do.

post #4 of 55
Find out if your town has any work off programs for the property taxes. The city I work for has a program that allows low income residents to work off half of their property taxes each year by volunteering for the city in various capacities. I would also contact the housing authority in your area. Assisting you to pay your taxes would be much cheaper for them than finding and assisting with housing for 6 people.
post #5 of 55

Taking on rent with an already stretched budget is not going to help your situation.

 

Personally, what I would do -

 

Stop using debt/credit cards. Stop paying the credit cards. Yes not paying them will kill your credit and cause your phone to ring constantly. However, it sounds like you need to eventually declare bankruptcy anyway. But before you can declare bk you need to make sure it will help you. So you need to live without using credit for a while. They cannot throw you in jail for failure to pay your debts. It will likely take them 12-18 months to even move to getting a judgment to be able to attempt to levy your bank account or garnish your salary. Because you make so little money all of your income as well as your husbands disability are exempt anyway. If your situation improves later you can straighten out the cards then.

 

Figure out the tax situation. Either take out a small loan to pay the taxes or find out what options your city has. But get them paid. It's not in your best interest to loose a house with value that you own free and clear.

 

Look around for other opportunities for help. Contact your utilities programs for low income assistance options, ask around for food options. My town has several locations to get food boxes. Our local Lutheran Social Services, or Catholic Social Services directs people to some of these opportunities. Make an appointment and ask them to direct you to resources you may not already be using.

 

You then have housing, food and utilities figured out and you can work on what you need to do to increase your income. 

post #6 of 55

I would worry that the money from the house would run out faster than you think, and you will be back at square one, but without the house to live in.  Are there any programs in your area to help your dh upgrade his skills for employment?

post #7 of 55
Quote:
Originally Posted by JollyGG View Post

Taking on rent with an already stretched budget is not going to help your situation.

 

Personally, what I would do -

 

Stop using debt/credit cards. Stop paying the credit cards. Yes not paying them will kill your credit and cause your phone to ring constantly. However, it sounds like you need to eventually declare bankruptcy anyway. But before you can declare bk you need to make sure it will help you. So you need to live without using credit for a while. They cannot throw you in jail for failure to pay your debts. It will likely take them 12-18 months to even move to getting a judgment to be able to attempt to levy your bank account or garnish your salary. Because you make so little money all of your income as well as your husbands disability are exempt anyway. If your situation improves later you can straighten out the cards then.

 

Figure out the tax situation. Either take out a small loan to pay the taxes or find out what options your city has. But get them paid. It's not in your best interest to loose a house with value that you own free and clear.

 

Look around for other opportunities for help. Contact your utilities programs for low income assistance options, ask around for food options. My town has several locations to get food boxes. Our local Lutheran Social Services, or Catholic Social Services directs people to some of these opportunities. Make an appointment and ask them to direct you to resources you may not already be using.

 

You then have housing, food and utilities figured out and you can work on what you need to do to increase your income. 

This is very reasonable advice.  Since you already own a house free and clear, you really don't need to worry too much about a credit rating.  Let the crredit card payments go if you are still paying on them.  Worry about it later.  Bankruptcy will likely get rid of them anyway.   Check into any and all services.  Ask around of everyone: social services, churches, food pantries.  Sometimes services are rather hidden, like in my community where there is a small non-profit that makes free loans of medical equipment to people.   There are also things to help pay utility bills.  Also, cut all expenses to the bone.  I was recently in a situation where I needed to keep every penny and I used to go to the library to read instead of turning on a light in my house to save the electric bill.  I still am very mindful about keeping my electric under $45 a month (and it could probably go lower, too).  In the past people have posted their budgets on here and I think they mostly got some fantastic advice.  You might want to consider doing it. 

post #8 of 55

If your husband is getting Social Security disability, then probably your children are also eligible for SS benefits, up to a family limit. 

 

I wouldn't advise selling the house unless it is going to allow you to move somewhere with a much lower cost of living, or with much better prospects for employment.  Get caught up on the property taxes somehow, first of all. 

 

Then I would recommend sitting down and working out your cash flow problem:  how much money and assistance coming in, versus how much your family needs (leaving debts aside).  How much short are you each month? 

post #9 of 55
Thread Starter 

Thanks everyone.  Sadly I am doing everything you've all mentioned except for bankruptcy and calling the tax collectors.  So, today I did call them and waiting for calls back.  I haven't paid my credit cards in ages.  Even with all of this - food pantry, etc, things are still terrible.  I have a big house and we do use a lot of electricity.  6 people, 5 bedrooms, tv on a lot, etc.  I am a stickler about keeping lights off and not using it when we don't need to use them - I suppose I will limit tv time now too.

 

I am hoping for another job.  There's not much out there, it's terrible. I've applied to at least 10 now.

post #10 of 55

Just curious.  What is the dollar amount that your back taxes are?

 

I ask because I think my advice for you would be different if you were behind by $300, $3,000, or $30,000.  I also know that there are hugh regional differences in property tax rates.

post #11 of 55

It looks like she is in upstate NY and I know my county - central ny - is one of the highest taxed areas in the US. My 85,000 dollar house is taxed @ approx 3800 / yr (that is with a STAR reduction (some kind of program), school taxes and property taxes)

post #12 of 55
Quote:
Originally Posted by SunRise View Post

It looks like she is in upstate NY and I know my county - central ny - is one of the highest taxed areas in the US. My 85,000 dollar house is taxed @ approx 3800 / yr (that is with a STAR reduction (some kind of program), school taxes and property taxes)

That's what I was afraid of greensad.gif.  If her rate is similar to yours two years of nonpayment plus penalties/interest is at least 10K  and more likely closer to 15K. 

 

I think you would be better off selling your house.  Based on what you have shared you can not afford the taxes or having five bedrooms to heat in a cold climate.  Having a paid for house is a wonderful thing  but that still doesn't mean you can afford the monthly cash flow and upkeep on it. 

post #13 of 55
Thread Starter 

About $10,000 so far, and that's nearly 3 years worth...

post #14 of 55
Thread Starter 

Oh boy, I really appreciate all of your brains working on this form me.  This is so hard.  It will be so sad but I want to do the RIGHT thing.  I cannot make a mistake with this one!

post #15 of 55
You really need to crunch some numbers to see if a rental will be cheaper
post #16 of 55

Can you rent out a room or two in your house? It will mean kids will have to share, but they will if you get an apartment, too. I have a friend who has done this, and it seems to be working well.

post #17 of 55

This may be way outside of your comfort zone or even beyond financial possibility, but is there any way you could rent out part of your house?  Not evena room neccesarily, but maybe 3 rooms with its own bathroom that could be turned into a small apartment with a separate entrance?  Even if there is just a locked door between the two units?  I looked at buying a house that was set up like that, two rooms and a small bathroom became a 1 bedroom apartment if needed, or the door could be opened between the units to use the full house later on.  The entrance was just the normal back door to the house.    The owner had put in a couple of kitchen cabinets and a small sink, stove and frig in one part of the living room.  They were easily removed when they were no longer needed or wanted.  She basically only rented to single adults that were referrals from people she knew.  If I had bought the house, I could have had almost 2/3 of my mortgage taken care of with that rental.
 

post #18 of 55
Can you sell your house and pay cash for a smaller one, using the difference to pay down debt and back taxes? I would worry about renting and going through the $ too quickly too.
post #19 of 55
Thread Starter 

Hi, sorry I've been out for the count the past couple of days in the freaking hospital of all places with diverticulitis.  Antibiotic and pain killers - quick fix thank God!

 

Well, I have considered renting out rooms in my house.  I love the idea of separating the house but in mine it's just not possible.  If only there were a bathroom on the other side, then it would totally work.  I do worry about who to have in the house and having 4 kids, I don't think I could trust anyone!

 

Yesterday the county called me back and said I can have a 24 month payment plan for the back taxes.  The bad news is I have to put a down payment of $944 down.  I can't even afford to buy myself a new toothbrush!  I told her that I would not be able to come up with that and she said that was the best option  they could offer me :'(

 

I think there is a small possibility of buying a smaller house.  I did a search in our school district and there was one which could be possible.  I'm going to keep looking.

 

So....what do you all think at this point after all of the discussions?  I think I will add a poll.

 

THANK YOU SO MUCH

post #20 of 55
Can you give us some numbers?
Current income, estimate profit after selling current home, cost of smaller home, living expenses, etc

I'm concerned that after selling your current home and paying the back taxes plus the fees associated with selling a home that you will find yourself back in your current situation of owning a home with no money for daily living, if you buy another home albeit smaller.

I think selling your current home and then renting something you can truly afford is probably best.
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