Monday, April 25, 2011

Bankruptcy might be our best option..

If you've read my previous post, you'll see we're in a bit of a jam. We spent too many years not doing the right thing, and it's come back to haunt us.

For two years we've been stuck in a place we hate. We're cramped, we have no yard, we don't like our neighbors. The only good thing about where we're living is that it's affordable and it's in the school district I want my kids to stay in.. and we're allowed to keep our pets. Everything else about it just sucks!

So we want to buy a house, but we have terrible credit. Now we haven't necessarily done anything to get horrible credit, except not pay certain bills. We've never owned credit cards or gotten loans or anything silly like that knowing we can't afford it. What we've done is gotten appendicitis when we didn't have health insurance, or had a baby and need to stay in a hospital for 2 days without knowing our insurance only covered 50% of that bill. Our biggest mistake was not finding a way of paying on those bills, and being too broke to be able to afford paying on those bills.

So, I've got it in my head now that I want to get out of debt and own a house and move out of this miserable place. I started taking some steps towards that goal. I found out that if I pay off my judgements (each judgement is a medical debt from either the appendicitis or having a child) my credit will be good enough to get a mortgage loan. So, I contacted the lawyer who holds my judgements. That's when the shock set in.

I knew I had about $6,000 worth of judgements. Both from having a child. I owed $4,000 to the hospital where my 4 year old was born, and $2,000 to the hospital where my 3 year old was born. Hubby has both of those plus a $7,000 judgement to the hospital where he had his appendectomy.

However, somehow there are more bills than just those that I knew of. In actuality this lawyer holds $22,000 worth of our debts. Unfortunately the lawyer did not send a detailed list of these debts, just claimed that's how much we owe (some account numbers were listed but no other information such as the creditor or the exact amount per account number.. just a list of account numbers and the total balance. I'm convinced this lawyer was vague on purpose.)

Sadly we don't have that much money on hand.. and chances are it will take years to come up with that sort of cash. Of course while we're working on paying it off the debts will continue to accrue interest (not sure how that works on medical debts.. but that's beside the point).

Well my goal isn't to spend my life paying off debts, my goal is to get out of this place as quickly as possible. So at this point we're looking at bankruptcy. I think it's just what we need right now. We were stupid in the past, but we're different people now. Now we're serious about paying our bills on time and staying out of debt. We're serious about fixing our credit and owning a home. We will not get into further debt at this point. We won't open accounts we can't afford. We won't buy a house if we know we can't afford the monthly payments. We've learned our lesson.

We looked into bankruptcy a couple of years ago, and actually did begin to pay a lawyer in order to help us file for chapter 7. However, we never finished making those payments and never filed bankruptcy. I think that happened for a reason. I don't think we were in the right frame of mind at that time to stay debt free. I think having good credit at that time would have dug us into a deeper hole.

As I said, we're different now. We're better, smarter, and more responsible. I think now is the right time to file bankruptcy.

So I put a call in to the lawyer we'd begun to pay to see if they'll let us pick up where we left off with the payments.. or at least give us a credit towards the total fee because we'd previously paid them at least $400. I'm waiting to hear back on that before taking the next step. Wish us luck!

Thursday, April 14, 2011

Bad Credit Ruins Lives

I really wish I'd known 10 years ago what I know now.

Over the years hubby and I have pretty much completely ignored any bills or debts that weren't an immediate threat. If we weren't going to face losing the roof over our heads, or our electricity, we didn't care. We racked up a lot of bills and never paid them off. I have to say 90% of it is medical debt, and those are the ones hurting us the most. We do have a couple other little things, a couple car repos from 6 years ago, an eviction 5 years ago, things like that. But mostly it's medical, and 2 of those medical debts have filed judgements against us (2 for me, 3 for hubby). Our credit is awful!

We're turning things around now. Our bills are being paid on time, even a little early. We've been making some payments on our debts. Things are starting to look up.

My main goal at this time is to get a house. I'm sick of living in a dump of a trailer. We have no space what so ever, we have no yard for the kids to play in. All in all it stinks and we're miserable.

I decided to look into the possibility of being approved for a mortgage. Unfortunately we don't qualify at this time. We were told by the mortgage company that if we could erase the judgements then they could work with us.

Well the trouble is I owe $6,000 on my judgements, and hubby's is double that at least.

Had I been smart enough to have been making some payments on those judgements, I could be in a situation right now where we could see about affording to own our own home.. or perhaps we'd already be homeowners. Instead, we were stupid and ignored our debts. Now we're faced with paying off these ridiculously expensive debts in order to escape our situation of living in a dump!

But at least now I have a little direction. I'm going to begin paying on these judgements, and hopefully by the time we get our taxes back next year I will be capable of paying them off completely. So hopefully by this time next year we'll be proud homeowners.

I also need to work a little harder on building up my savings. These past few weeks I haven't been saving any money. Actually I used my last two paychecks towards sending my kids to camp this summer.

I must say I am enjoying having the extra money from working. It's amazing how much our lives have changed already. Last year I couldn't have even considered the idea of sending my kids off to camp. Hubby's money alone barely covered the bills, and then we always needed or wanted spending money. We'd somehow manage to overdraw our bank account every week. The following week we'd have just enough to pay our bills, but in order to buy groceries we'd have to overdraw again. It snowballed out of control.

Now, our bills are paid, we usually have a bit of money left in the bank when the next paycheck hits. My money is being used mostly for extra cash or fun things, like sending my kids to camp. Plus we have money in 3 different savings accounts right now. Granted it's not much, pool it all together and we might have $500, but it's there, and it's more than we've ever had before. We're getting somewhere.

So I'm feeling really good about our current financial situation, I'm just not feeling good about our credit situation. But I'll be working on that.