Ok here is the backstory:
We purchased our house right before the collapse in 2008, so this October we will have been here 5 years. We bought for $73,000 and still owe just over $68,000. For a while I was doing the Dave Ramsey thing as much as I could, I could never get DH on board with it and still can't, not that it matters right now anyway though because we are so far from making it nothing would help at this point. I had the $1000 emergency fund in the bank, and was working on slowly paying off the last of my credit cards. I have probably $14,000 in debt between 3 cards and 1 bank loan. Both the cars are listed as collateral on the bank loan.
On June 30th my husband went in for an appendectomy and the Dr. messed up really bad, they cut his intestines open and would not listen to DH so it was 4 days before they went back in and found him septic, they tried to fix him, it didn't work, he had to have yet another surgery (total of 3 surgeries in 10 days) and spent a month in the hospital, and just got released from wound care last week, in this last month he had to go to the doctors 3+ times a week and could not work. In this time 2 windows in my house got broken, and my cistern failed twice along with 90% of my plumbing. We have not had running water for 2 weeks. The first time the cistern failed cost me $4,500 to fix, this second time I am not even done getting it fixed and I am looking at close to another $3,000. I am hoping to have running water again tonight or tomorrow morning when the plumbers can get here to fix the last of it because I just can't fix anything else myself.
My Jetta's clutch also went out and that cost another $1,400. Its like everything that could go wrong has gone wrong.
So Husband has been out of work, we owe a ton of money to the hospital, the credit cards, the bank and still need to find money to eat and live on. I *hate* my house, it just keeps breaking and has been since the day we moved in. We pay $720 a month to live here and since DH came home from the hospital he lost most of his computer clients (thats how we made enough money to live was his extra income from computer repair) so we are only bringing in at most $1950 a month.
So now for my question, I talked to 2 people I know in real estate and they told me to let the bank have it and just walk away, there is no way we will be able to sell it for what we need to repay the loan on it. My MIL has offered us the money for a down payment on some land we want. The land we are looking at is between $20,000 - $40,000 and none of it has a house on it. But we could put a shed or a camper trailer on it and live like that for a while, and then build a earthship house or some other form of cheap housing. I am not afraid to live in a camper or shed for a while. At this point I would welcome it. I know that if I walk away from this house my credit is going to be ruined and that I will have a hard time getting any more loans but I am so underwater right now I just don't see any other options. We were told that we can just stop paying on this house, put all the money we would put into the payment into a savings account and then once we actually get foreclosed on and kicked out we would be able to put a hefty down payment on a construction loan or another house. My neighbor wants to buy our place but I just don't see us able to keep paying the payment until he is ready to buy it next year.
So in your opinion what are my options here? What would you do? Would you walk away?
And we already live very frugally, we don't have any extra bills that we can get rid of. We already live at the bare minimum of what we can here in order to survive.
So some questions..........can't you sue the doctor for medical malpractice or medical damages? And what about a refinance.....over the last 8 years, we've refinanced three or four times, with zero fees and no mortgage increase......our payments wen't down by over 700 I think. What about a short sale? would that work out better? (I only know the term, not really sure how it may or may not help) Good Luck.
First I would call the hospital finance dept and see if you qualify for charity or financial assistance. If your credit is shot, dont worry about the medical bills. (medical is always last on my list of things to pay, sorry).
Are you sure living off grid is the best option, What about moving to town and renting an apt? that way when things break you call the landlord?
It should take a couple months for the bank to get the foreclosure in motion, if that is what you want then stop paying however, keep in mind it will mess your credit, esp if your husband lost his second job. Are you looking at bankruptcy when this is all over?
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zebra15 - We do have some financial assistance from the hospital, however we still owe them so much money its not even funny. We are trying to see what else we can do. If I have to I can pay them all off with a credit card but then I will have maxed it out. And if one more thing in this damn house breaks we are screwed.
Yes we are 100% sure we want to go off-grid and get away from the system. Renting is not an option for us due to our animals and our desire to be out of the city. Not many places that let you bring goats, rabbits, dogs (pitbulls), cats and horses are going to be cheaper than where we are now. I refuse to get rid of my animals. I will live in a tent before I get rid of them. I have had most of them longer than I have had children and longer than I have been married.
I don't think bankruptcy is an option at this point... It might be, I don't know. I would rather pay off everything that I can though. Its just going to take FOREVER and I won't be able to do it with this house.
I would not pay off the medical bills with the credit card. This advice is sort of hazy and I hope someone jumps in to correct me or give you guidance but here goes - I do payroll for a construction company and get contacted occasionally by some sort of organization that helps people settle their medical bills. I think it might be the depart of welfare? Anyway, I fill out the wage information and this agency works with the hospital to get the bills lowered. Also, I seem to remember hearing that one can make the smallest of payments (like $40 per month) towards medical bills and it won't affect credit.
If you default on the house and expect to finance the land it had better be a private deal with someone who doesn't care about credit. Expect a lot of costs up front for even a small shelter, for water, generator, whatever you need just to live. Where would that come from? Getting creative can save a lot but not everything. Have you been in touch with the hospital to see about a payment plan yet? For big bills they know you won't pay up in one lump sum, but won't stand for you putting them off entirely. Interest on credit would suck if you can't pay it right away. I would not consider foreclosure or bankruptcy, myself. But it's tempting I'm sure, to walk away and start fresh on just a piece of land. There is an option besides foreclosure sometimes where you sell the house back to the bank, walking away without them putting punitive procedures on you. The guy who had our first house before us did that. Deed in lieu of foreclosure. Hard to get them to agree to but better than a foreclosure. Can you go down to 1 car, pay off the bank loan with that money selling it? Can DH sell off some electronics? (computer guy, I'm sure he has some, my DH does that for extra $ now and then).
Definitely don't pay off the medical bills with a credit card. Keep working with the company. Keep explaining you can only pay X amount.
A short sale would probably be a good bet. My understanding of it is incomplete, but basically you can live in the house until it's sold, only paying utilities; you don't have to fix anything up (the buyers have to accept it as-is); and then you don't get any of the money from the sale. I'm not sure about the effect on your credit, but it can't be worse than a foreclosure. A friend of mine sold her house at a short sale after she lost her job, couldn't get another for a year, and had to accept a 50% pay cut.
It could be years before your house is actually foreclosed on. It'll be years beyond that before you're eligible to buy anything big. You'll have to have cosigners for loans, your credit will be shot, etc. Walking away from your loan is a big deal (I know you know that, but it bears repeating).
We had to move for work in 2009 and weren't able to pay both our house payment and our new rent. Wells Fargo didn't foreclose until spring 2011. Because of that, we can't even think about buying a house until 2014.
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Another thought, since it does take so long for them to kick you out, if you're resigned to foreclosure then you can redirect that mortgage money to paying off everything else very quickly. If you finish that and have time left, save up (perhaps in cash, untraceable?) for your OTG home's expenses. Then with foreclosure but no bankruptcy you could be ready to start fresh. Again, if the land was a private loan from somebody who didn't care about credit.
Just wanted to add, about the short sale... it is in the bank's best interest to let you live in the house until it is sold, rather than foreclosing and kicking you out, because you maintain the house and reduce its attractiveness as a target of crime. If you're no longer living on the property, they have to keep paying someone to go over and mow the lawn and check for vandalism and so forth. If you can't or won't pay your mortgage anymore, the short sale is a better option for you and the bank than the foreclosure.
I feel super strongly about this: your financial problems will NOT be solved by moving to bare land (that is 100% financed even?). That, with an ill spouse, is a recipe for homelessness or at BEST a rental (can you really find a rental for less than 720 a month?) If your mom can help with a down payment (again this assumes financing) on land, why not $ to get your house repaired or your CC paid off? Banks don't just roll over & do short sales, they want a complete accounting of your accounts, including the money 'piling up' for a new property (that can't be financed for two years after SSale is complete).
Camper life is GRISLY & @ best like a 9-12 month deal. Plus it is not something DSS is a huge fan of.
I would leave your housing situation alone until you deal with the other debt. You can buy water, it is actually relatively cheap. You can go to a laundromat. Definitely get under the hospital's skin. You may not get a payout, but you should have the bills handled.
The fact that the house is underwater is really immaterial unless you *need* to relocate elsewhere for some reason.
I'm not a lawyer, but if I were in your shoes, I'd be looking for another lawyer. It is true that there are risks with surgery, but not taking the care to examine and repair the intestinal wall at the time of surgery is malpractice. Incompetence in not following through with your husband's complaints is unforgivable. Time for somebody to pay.
To immediately start taking care of your financial difficulties. I would be pursuing bankruptcy. It immediately takes the heat off and gives you time to regroup.
If you are really going to walk away from the house then you should be reducing your stress and home to do load before looking to jump into something new.
Your house is a responsibility as much as your animals or children. Running away and starting something new is a dream and a fantasy, but is it truly realistic? Will there be fall out from walking away from your previous home, financially and legally that will impact your new place. What happens when you run into problems at your new place?
Sometimes the devil you know is better than the one you don't and it's better to just deal with the known then the unknown. The whole "bloom where you are planted" deal.
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If you bought it for $73k and currently owe $68k, you're not upside-down in it; you actually have a little equity, which isn't bad, actually. I personally would only walk away as a last resort.
|Frugality , Finances|