Credit card, mortgage, debt?

tttcomrader · #1 (**permalink**) 06-22-2010, 04:42 PM

My dad has having some serious financial problems:

His income is around $1200 a month plus $400 social security, plus $500 a month from a person renting a room out of his house.

He currently owes around $120,000 mortgage (Chase) on a house that is currently value at $140,000. Monthly payment is $1186. Interest rate 5.8%. Which he is now three months behind, and he is applying for loan modification now.

He currently owes around $8700 on Chase credit card and $5000 Bank of America credit card. All at high interest rate (20%+, I think).

Basically, I'm unable to continue to support him financially (been doing that over the past 8 years, I'm at 50k debt myself due to school loan and I only make 50k a year). So what would be a way out for him? Bankruptcy?

If he can just stop the credit card payments, I will be able to help him out, but I simply can't maintain both my living standard, pay off my debt, and pay off his debt all at the same time. But will the credit card company sue him and try to seize his assets?

Thank you so much!

littleroc02us · #2 (**permalink**) 06-23-2010, 02:43 PM

I think his problem is the house. It is eating up 56%of his income. That is a recipe for disaster. His home needs to only consume no more than 35%. Sell the home and try to break even. He needs to stop using his credit cards and pay those off. Sacrifice is the only way.

sapphirecapital · #3 (**permalink**) 06-23-2010, 07:27 PM

I disagree on the sale of the home, as long as he has rental income he should stay, renegotiate and get back on track, than stop the credit cards and settle them, I doubt they will sue, it will be uncomfortable but his credit is already hit due to the mortgage problem. When the house is sold in this economy its unlikely to bring the real value and he has to deal with the broker cost so he will come out at a loss and still have no house to live in and he will have lost the rental income. Bankruptcy should be the last move.

tttcomrader · #4 (**permalink**) 06-23-2010, 10:40 PM

My dad's credit won't be a problem, I doubt he need (or should) use it anytime soon.

As long as he has a place to stay he is fine, right now with the rental income he has only paying $700 a month to stay in the house, and if supporting him with $300 a month will keep everything working I'm fine with that.

My only concern really is what consequence he will have for not paying the credit card, such as getting his assets (which include my and my sister's cars that are paid for by us...) seized.

goodyphilips · #5 (**permalink**) 08-20-2010, 01:13 PM

Well i think you should make him go for debt consolidation, that could give him and you lot of relief.

SamuelClark · #6 (**permalink**) 08-22-2010, 10:12 PM

I don't think that the credit companies will do much about it immediately- but you can't just forget about the debt. Perhaps you can stop the payments for a few months until you get back on your feet.

Best of luck
Samuel Clark

goodyphilips · #7 (**permalink**) 10-19-2010, 04:15 AM

But those missed payments will pile up the balance and make the life further difficult.

Adia · #8 (**permalink**) 10-22-2010, 09:32 AM

he should pay he's credit card bills to avoid any problems

richard29 · #9 (**permalink**) 11-26-2010, 04:54 AM

I would rather say go for credit card as you get time to fix the financial problem and may be your fortune changes.

Codav Enterprises · #10 (**permalink**) 03-17-2011, 10:36 AM

I agree... get a hold first of the expense that's need to be paid.. Hold the credit card because the interest can pile up..

ralphegermain · #11 (**permalink**) 03-18-2011, 10:40 AM

My thoughts as well. Those plastic cards are a nightmare for real! Hold it off till he is on the track again. As long as he keeps the house intact, yes, he will be fine. But try to ask the CC or bank if he can get a deal for lower monthly pays. I'm not sure though, it was a thought.

jonathanpaul · #12 (**permalink**) 03-24-2011, 01:04 PM

Hi tttcomrader,

Bankruptcy can sometimes be your best way out of an overwhelming debt. Always look at all of your options when considering bankruptcy. Generally speaking, if you suffer from financial hardship, have very limited income and most of your assets qualify as being exempt from bankruptcy seizure, Then it's a good idea for you to get a free consultation from a Trustee about going bankrupt.

Don't be afraid of dealing with your debt. Sometimes bad things do happen to good people or you just made some bad choices in life. We are only human. The worst mistake you can make is putting it off. Either way if you choose debt settlement or bankruptcy, start your path to debt freedom as soon as you can and get on with living life totally debt free.

Reliable2all · #13 (**permalink**) 04-05-2011, 05:01 PM

please ask your dad to settle the credit card debt first as this is a unsecured loan. Once that's done don't use the credit cards. The home is a secured loan you can ask the bank for a consolidation.

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