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Finding Your Way Out of Debt

  • How Can We Recover After Hurricane Sandy? - Peggy

    Dollar Stretcher Readers Question

    Dear Steve,

    July 1st we began to repay a re-finance on our home as a means of consolidating all my husband's credit cards, and personal loan. We owe $129,511 at 3.75% for 15 yrs. $1529/mo. We've live in a semi-detached, split level home for 37 yrs. The house is built on a concrete slab. The re-fi allowed him to close out everything save one credit card. On Oct 29, 2012 our home was affected by H, Sandy...through flood insurance, and donations we have rebuilt and repaired our crawl space,1/2 bath, and den, and backyard.

    I will be 65 in Oct., and husband will be 70 yrs. in Sept. Our next door neighbor is 76 and very ill, unwilling to move for her own reasons. Before Sandy the house was valued at 350K, now it may be 300K.

    Question What should we do to sell, so we can sell and move? What's the best price to ask? Thanks!

    Peggy

    Don't miss my free my weekday email newsletter with the latest tips and advice on how to beat debt and do better financially. Subscribe now. - Click Here

    Dear Peggy,

    Thank you for writing in and asking your question.

    In situations like this there are two ways of looking at the situation. Most people review the situation emotionally and make decisions based on wants and wishes. The other way would be look at the financial reality of the situation.

    It might just be that rebuilding the house makes no financial sense if insurance is not sufficient to cover the costs and all you've been able to manage to rebuild is just part of your old house.

    At your age we need to evaluate what you can accomplish without robbing your retirement funds or setting yourselves up in a monthly position where you can't afford to get by.

    It's too early to know what the right decision is at this point without having some good information about the sales price of your current property. And the only way to really determine what the sales value might be would be for you to pay for an appraisal. The appraisal would be a professional evaluation of what other similar condition properties have sold for.

    Outside of paying for the appraisal you could talk to several local real estate agents and try to get an idea what the property might be worth. But you will need to be careful and watch for agents who inflate the suggested value just to convince you to list your property with them in hopes of it selling for a higher price.

    It's unfortunate that you did the refinance before we tackled the real underlying issue here of the apparent house status. It would have been preferable to look at the total overall situation before paying for the consolidation.

    My advice at this point would be for you to get a good understanding of the value of your property before you do anything. Once you do that, contact me again and let's move on to the next step.


    Get Out of Debt Guy - Twitter, G+, Facebook

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  • Want Some Help to Get Out of Debt? That's What I'm Here For.

    I wanted to take this opportunity to introduce myself to the awesome readers at The Dollar Stretcher.

    I'm Steve Rhode, the Get Out of Debt Guy, and I help good people to deal with bad debt. That's my story in a nutshell.

    But for people who might be facing money troubles and worries, you are not alone. I've faced money problems myself and in 1990 I filed for bankruptcy. It would be hard to imagine being more down and out than I was at that time. If it hadn't been for my parents taking my wife, daughter and myself in, We would have been homeless. Thank goodness for family.

    From that experience I learned a lot about dealing with debt. In 1994 I founded a nonprofit credit counseling agency. We did some very innovative things and in fact opened the first inpatient treatment program for compulsive spenders. In 2006 I moved to England to help people over their with debt problems, After a couple of years I moved back to the U.S. and I now live in Raleigh, North Carolina. Along the way I've written a number of books and you can download them for free If you want to learn more about me, you can click here.

    These days I work from home and just help people for free by providing advice and compassionate help. People come to my site at GetOutOfDebt.org and ask me questions. With over 19,000 posts on the site, there is almsot an endless amount of information and advice to draw from for help and advice.

    Don't miss my free my weekday email newsletter with the latest tips and advice on how to beat debt and do better financially. Subscribe now. All the smart people do. - Click Here

    Both Gary Foreman of The Dollar Stretcher and I started providing advice online around the same time in the early 1990s. Gary's been focused on helping people find creative ways to do better financially and I've been saving people from disaster for decades.

    Recently Gary and I were talking and we decided offering Dollar Stretcher readers access to what I knew about dealing with debt would be a smart thing to do. So here I am.

    If you have a credit or debt question you'd like to ask, just click here and ask away. I'm here to help.


    Get Out of Debt Guy - Twitter, G+, Facebook

    If you have a credit or debt question you'd like to ask, just click here and ask away.

    If you'd like to stay posted on all the latest get out of debt news and scam alerts, subscribe to my free newsletter.

    I'd like to invite you to participate in the Get Out of Debt Guy Support Group. Everyone is welcome.

  • Is Debt Settlement an Alternative to Bankruptcy? - Antonio

    Reader Question

    Hi Steve,

    I am a financial advisor who trys to help people get out of debt while building up some savings at the same time.

    I wanted to know what your thoughts are on do it yourself debt settlement as an alternative to bankruptcy.

    I would not use or recomend a debt settlement company as most of these seem to be scams, and when it comes to bankruptcy most people I see go through it do a chapter 13 and end up worse off.

    So from my research to date it looks like settling your debts yourself would be my second choice if you can not afford to do a snowball type debt pay off plan.

    What are your thoughts on this?

    Warm Regards, Antonio

    Don't miss my free my weekday email newsletter with the latest tips and advice on how to beat debt and do better financially. Subscribe now. - Click Here

    Dear Antonio,

    Thank you so much for asking me your question.

    For the right person in the right situation debt settlement is a viable option. But the target characteristics are someone who has cash on hand to settle and would otherwise have to have filed a chapter 13 bankruptcy. In those cases attempting to negotiate a suitable mutually agreeable settlement with the creditor may be possible.

    But rather than become a tough exercise, people will be surprised to find proactive settlement offers sent to them by their creditors when they fall 90 to 180 days behind. I'm even seeing more settlement offers being sent by private student loan creditors. Just yesterday a reader told me they received an offer from their private student loan lender for 20% of the balance.

    But settling debts is not a magic wand. There are risks and consequences. I would suggested you read my guide on the pros and cons of debt settlement before anyone you know launches into trying to settle their debts.

    The two biggest risks of settling debt are the potential tax bill that may be due from the forgiven debt and the potential to be sued by the creditor if no mutually agreeable settlement offer can be reached. Once someone defaults on their debt the creditor may take advantage of all of the steps they laid out in the account terms and conditions, including avail themselves to take legal action.

    The problem with the way debt settlement was sold over the past five years was the salespeople sold it to anyone with a pulse rather than properly qualifying the right people for the approach.

    I've seen all sorts of horrid examples of people who were sold into debt settlement programs. The wrong person would be someone that could file a chapter 7 bankruptcy instead or who did not have the cash on hand to settle now. By putting these people into a debt settlement program it set them up to really be sued and it robbed them of the ability to save as much as possible for retirement.

    There are some very good coaches out there who are very affordable and inexpensive and can guide someone through the DIY debt settlement process. People like those here, here, and here.

    But before anyone makes any decision about what approach is best for them to use to get out of debt I would suggest they review their options using the How to Get Out of Debt Calculator.

    I really like your approach of helping people to get out of debt and save at the same time. It's such a critical thing to do and something that most people overlook.

    But my overwhelming concern here are those people who jump to other solutions because they want to avoid bankruptcy because of assumptions or fears of bankruptcy. Bankruptcy is actually the most logical and mathematically sound way to deal with problem debt. And when you understand the facts about bankruptcy it's hard to say it's not the preferred way to deal with bad debt.

    About 70% of people who file bankruptcy discharge their debts in about 90 days and can get back to building a safer financial future as quickly as possible. It's easy to rebuild credit and people are surprised how quickly they will be able to get credit again.

    If someone wants to honor promises to repay debt, there is nothing that prevents anyone from getting the legal protections and fresh start bankruptcy affords them and repay their creditors as they can, if that is what they want to do.


    Get Out of Debt Guy - Twitter, G+, Facebook

    If you have a credit or debt question you'd like to ask, just click here and ask away.

    If you'd like to stay posted on all the latest get out of debt news and scam alerts, subscribe to my free newsletter.

    I'd like to invite you to participate in the Get Out of Debt Guy Support Group. Everyone is welcome.

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