Need some advice

[Ron G]

Well as most know i got married in jan, well heres the deal the wife has a bankruptcy shes paying on and student loans.all of these payments are bogging us down.I have my house i bought 3 years ago on a 30 year fixed at 7% it aprases for 80,000 and my loan is for 54,000,all in all 24,000 would take care of the bankruptcy and all the other loans,so would be smart to re-fiance the house?or get a second mortgage?or just work threw them a little at a time.Thanks guys i know i will get some answers.

 

[PW2]

Re: Need some advice

It depends on your individual circumstance, of course, and there is no simple answer.<br /><br />It wouldn't hurt to at least get a quote from a lender or two and see what your options are exactly.<br /><br />You are better off retiring old (presumably higher interest) debt, as long as you can leave the credit cards in the drawer and not use them. It can be disasterous for some who somehow get themselves back into credit card debt, while having a new, larger mortgage.<br /><br />You have to be disciplined and honest with yourself to know the answer to this question, as only you can answer it.

 

[dolluper]

Re: Need some advice

What she claimed bankruptcy and still paying HUH!! Around here you claim bankruptcy and pay 0000000000000000

 

[Mark42]

Re: Need some advice

If you take an equity loan on the house and pay off the student loan and bankruptcy payments, you can deduct the interest from your taxes. Strictly speaking the money from the equity loan is supposed to be used for home repairs and/or improvements to be a tax deduction, but it rarely is. I don't even think Turbotax asked me if the money was used on the house or not. <br /><br />So, you save up to 28% of the loan interest as a itemized tax deduction.<br /><br />I'm not sure if student loans are already tax deductable. <br /><br />Equity "line of credit" loans are nice because they often cost nothing to open, are like a revolving charge account, don't require all the processing of a re-finance, and payments go directly back into the equity of your house. Check with your bank to see it this is a good option for you.<br /><br />Word of caution: Most likely the house is in your name only. If you pay off the bankruptcy payments by using equity in your house, then you and wife split up, you are most likely left holding the debt. She will be debt free. Just something to think about. Any loan you take should have your wife as a co-borrower.

 

[Ron G]

Re: Need some advice

we only owe 1200 on cards and are going to try to wipe that out in the next month.i understand it does take alot of displine i've alredy been burnt by them credit cards and i hate them.

 

[KRS]

Re: Need some advice

You purchased your home 3 years ago, and are paying 7% fixed? This seems high for 3 years ago. Was there something in your credit history that you recall?<br /><br />Most lenders only go 80% LTV on a home, so your max loans on a house valued at $80,000 would be $64,000. Some lenders will go 90-100%+, however the interest rate will be higher.<br /><br />What you really need to decide is (it's easier for me to say than for you to say): do you feel okay paying her previous debts? Do you want to pledge your home to get another loan for her debts? Will you/do you resent her debt causing you financial distress? Unless these questions get worked thorough pretty soon, I think that problems will arise later.<br /><br />And finally, are her spending habits under control where she won't use credit cards, ever, ever again?

 

[dolluper]

Re: Need some advice

Hows does this bankruptcy work eh!!

 

[Mark42]

Re: Need some advice

Oh, oh, oh! Another neat option:<br /><br />If you work for a company that offers a 401k plan, or have a 401k plan through a financial institution (like Schwab, etc), you generally can borrow against the money in your 401k plan. Now here is the coolest part about 401k plan loans: Both the principle payment AND interest payment go back into your account! So you are literally paying yourself for the loan. In the end, you put back the money you borrowed into the 401k account, and added the interest into the account too. Of course, the money you borrowed will not be generating any value as an investment while being borrowed. But the interest repayment makes up for that.

 

[kenimpzoom]

Re: Need some advice

I wouldnt borrow money to pay off any exisiting debt unless the payments or interest rate will be significantly lower.<br /><br />Call the debtors and see if you can work out some payment plan.<br /><br />Ken

 

[flips]

Re: Need some advice

Ron is your new wife paying towards this debt.<br />If not i would make her , mate i would not be putting myself in the .... if she was not paying into it and noway would i put my house up. Hey its your call love sometimes can hurt.<br />did you know about these debts before you married.

 

[Ron G]

Re: Need some advice

She is paying all of it right now,her speanding is fine?all of this are good ideas and give me alot to soak in and think about.I do'nt regret paying her previous loans and debt i knew all about it before we got married.when we got married i took her as my wife to be as one.whats mine is hers and whats hers is mine.keep the toughts a coming her bankruptcy garnishes here check whisc is 168 dollars a paypay period or every 2 weeks plus the student loans is coming out.

 

[KeltonKrew]

Re: Need some advice

you generally can borrow against the money in your 401k plan. Now here is the coolest part about 401k plan loans: Both the principle payment AND interest payment go back into your account! So you are literally paying yourself for the loan. In the end, you put back the money you borrowed into the 401k account, and added the interest into the account too

A lot of people do this, however, the money you pull out will not grow as fast as if you left it in there. Granted you're paying yourself interest, but not at the rate it could be making.<br /><br />In addition, if you leave your employment (voluntarily or not) you most likely will be charged a 10% penalty and then 25-28% taxes if you can't pay back the full amount. It will be considered an early withdrawal!

 

[PW2]

Re: Need some advice

Laws vary from state to state, but I'd be a little surprised if, as a married couple, you could take out a second mortgage, or a refinance mortgage, without the lender requiring a joint signature loan with your wife.<br /><br />The bankruptcy may well affect your ability to qualify for the loan, and certainly will affect the terms the lender will offer in terms of interest rates. Have you been dealing with a financial institution for a while, or had a relationship with them? If so, sitting down with them, explaining the situation and goals, and getting their advice might be a good idea.<br /><br />My own theory of debt reduction has been to set up a budget you can live with, target one debt at a time, pay more or less minimums on all the others, and pay off that one as fast as possible, until it is fully paid. Then repeat the process on the next one.<br />And live within the budget you set!<br /><br />You can use any criteria you prefer (Usually the higher interest rate first) but focusing on one tends to make the problem seem more manageable, and progress more tangible, than trying to deal with all of them all the time...<br /><br />Good luck!

 

[Ron G]

Re: Need some advice

Thats what im wanting to do PW2,nothing like hard work and accomplishing something on your own,But it does get a little overwelming at times,its amazing how you can be doing real good and a few months later been up to eyeballs in it.<br />Thanks for all the good advice.

 

[oddjob]

Re: Need some advice

Originally posted by KeltonKrew:<br />

you generally can borrow against the money in your 401k plan. Now here is the coolest part about 401k plan loans: Both the principle payment AND interest payment go back into your account! So you are literally paying yourself for the loan. In the end, you put back the money you borrowed into the 401k account, and added the interest into the account too

A lot of people do this, however, the money you pull out will not grow as fast as if you left it in there. Granted you're paying yourself interest, but not at the rate it could be making.<br /><br />In addition, if you leave your employment (voluntarily or not) you most likely will be charged a 10% penalty and then 25-28% taxes if you can't pay back the full amount. It will be considered an early withdrawal!

I have done this and it is my understanding that it is a loan not a withdraw. So your money will grow just as fast, except that will be paying back the loan each payday. But you still have to pay your depts just less take home pay untill the debt is resolved. You are your own bank, cant go wrong. Also, I know its just demographics, but I made more in equity just last year than in my 401k in 14 years. Think I should buy some property?

 

[KeltonKrew]

Re: Need some advice

OJ.....it is a loan UNLESS your employment is terminated. It then becomes a withdrawal if you can't pay the remaining balance back in full.

 

[oddjob]

Re: Need some advice

Yes KK this is true....

 

[Kalian]

Re: Need some advice

Dolluper, there are 2 different kinds of bankrupty. One completely disolves the debts, and the other set up some sort of payment plan. <br /><br /> Ron, I thought the payment plan was interest free, but I could be wrong. If it is, it probably wouldn't be a good idea to borrow to pay it off unless the debt load is just too much to handle. Whatever you decide to do, good luck. I hope things turn out for the best. Oh, and kudos to you for your views on your role in your mariage!

 

[Reel Poor]

Re: Need some advice

Ron my question would be what is really bogging you down?? Have the two of you financed any significant purchases?<br /><br />My advice would be; Dont borrow money to clear debts that are being paid. I would suggest that if one or both of you are driving financed vehicles that you try to eliminate one or both of those notes and buy a vehicle/vehicles that may be a little more affordable (for now). Also cut back on any extravagant accessories that you may have in utilities ie, excessive cell phone bills, cable or satalite TV, all the stuff thats nice to have but not absolutly necessary. Its just time to hunker down and live on an even tighter budget untill things level out. Surely there is $ a month you can save somewhere you can add to the already monthly out going to eliminate these debts. It may not be easy but a necessary evil.

 

[Fly Rod]

Re: Need some advice

I would try to pay off the debt over time with out getting any loan!!!! A loan should be a last resort!!!! Get a second job or if she is not working best be getting her a job!!!!<br /><br />It happens time and time again that when someone gets a loan to pay off the debt, they charge things again and end up deeper in the same rutt!!!!<br /><br />Hope you do not have her on the deed to your house, or if she also has to sign the note with bankruptcy on file you most likely would not get a loan or you will have to pay a higher interest rate!!!<br /><br />Read My Lips!!! Even tho she is your wife, you had better have her sign a statement that she owes you for any part of a loan that you both are doing together!!! If she walks your "STUCK" paying !!!!<br /><br />Good Luck from the Sunny Bahamas!!!!!