Questions on getting Finances in order.

[Big Bubba]

Good day to my fellow IBoaters,
Yeap, I have a question about getting my credit back to good and getting my finances in better order so I can be in a btter position to purchase the new home I am getting owner financing on for at least 6 years. Anyway, me and my wife went to see a bankruptcy judge here locally and he basically siad that we made too much money to file chapter 7 and we could file for chapter 13 but we would probably have to pay back 100% of everything so we basically said forget that idea. Now, we went on-line and found a company called "Consolidated Credit Counseling Services, Inc" that are located in Florida. Anyway, they are supposed to be sponsored by United Way and what they do is I would provide all of my creditors to them and they will send a proposal to the creditors after I made my first payment to get the interest rates down and eliminate the late fees as well and make the monthly payments to these creditors and where supposed to pay these creditors off in 3 years, 4 months. The reason I am wanting to do this is I currently just purchased a home using my Individual retirement account for down payment back in December 2011 but I have 6 years to live in it and then at the 6 years there will be a balloon payment for the remainder of the balance but I will have to finance the remainder of the balance threw a bank. My credit is not that good right now and that is why I am getting ready to go threw a company called "Consolidated Credit Counseling Services, Inc" to help me out in this issue with my finances. I want to know from all of you if this would be of a good benefit and help me out or am I wasting my time with this company. Let me know because I really need help getting my finances back in good standing again. Thank you, Bob

 

[Big Bubba]

Re: Questions on getting Finances in order.

Here is the URL link to the company that me and my wife are thinking of using to get or bills taken care of and get our credit score back in good standing again. Please click on the URL link http://www.consolidatedcredit.org.

 

[CaptainKickback]

Re: Questions on getting Finances in order.

Big Bubba, I have to say such a baloon payment is always risky, but especially so in this economy. Given the banking industry's current attitude toward credit scores and past discretions, who knows what it will take to qualify for your loan six years from now.

Living in Florida, I have heard the advertisements for this company, as well as many others. Scuttlebutt is that some are good and some will just take advantage of you. So my only advice would be to make sure you research whatever company you use very well.

I do know you can call most creditors yourself and get interest and late fee breaks.

 

[tpenfield]

Re: Questions on getting Finances in order.

Just a few things to look into and keep in mind . . .

Credit management services usually charge a fee for each account that they are consolidating and getting interest rate concessions. So, make sure you are reading the fine print and understanding all of the money involved.

You can Google reviews of these organizations and get some insight.

Credit history typically takes 7 years to remedy. So, after 6 years, your problems will still be visible on credit scores, etc and may be problems in financing a house.

Additionally, lending institutions are starting to use something called a bankruptcy score in addition to the traditional credit score. These additional scores may have a longer history than the 7 years for credit scores.

I assume, if you do not make the balloon payment, the owner gets the house back (?) Is there interest payments during the six years?

Do the math, if you add everything up, can you make the payments?

Good luck with it all.

 

[Big Bubba]

Re: Questions on getting Finances in order.

tpenfield,
Yes, there is 6% interest on the duration of the loan using owner financing. I pray that I can get or obtain a loan her in about 4 years from now. That scares the crap out of me. Me and my wife really love the new home were in and I don't know what will do if we cannot get the loan we need to pay the balloon payment off after the 6 years is up. Alot of stress to worry about.

 

[fireman57]

Re: Questions on getting Finances in order.

Depending on the lending institution most times having a third party negotiate a lower interest on credit cards and such will show up as being as bad as a bankruptcy. My advice is to call the companies yourself and negotiate a settlement and new terms.They are more willing to do this than go through a "get out of debt " agency. CCC has been around for 30 years that I know of and when I worked in the credit business then they were paid handsomely out of your money.they would negotiate a very low interest from the companies and then take some of what they were "saving" you for them. It would still show up on a credit report as delinquent more than 90 days because of the back interest that was not being paid. If there is any way that you can make extra payments on these debts that will show as a good thing on your credit report. Talk to your local bank or someone in the credit business and ask them what will happen on your credit report if you go through with what you are planning.
The problem is you took on a balloon payment knowing that you would not be in a position to handle it. That is the same way that people get in trouble with the credit cards, "it's just this much a month" and they don't realize it is for at least seven years. the balance climbs so the interest is more, so their payment increases, then they come to the day where they realize that they don't have money for groceries because all their cash is going for these payments.
I'm not trying to judge anyone and am trying not to preach. I got out of that business in 1984 for just the reasons that I cited. I was the one that used to call and have people borrow more money even though I knew what it was going to do to them. Morally I just couldn't do it anymore. It used to make me physically ill thinking what I had done to some of these people even though that was my job. I was 22 years old when I started that and quit by the time I was 24.

 

[bajaunderground]

Re: Questions on getting Finances in order.

Bubba,

I have been in the residential real estate business for almost 12 years and most people that have some credit challenges are no more than 6 months from buying a home/getting a home loan. I have owned my own Real Estate Company since 2004 (it is an independent referral based company). I also used to be a Mortgage Broker with a local Brokerage house, but when my RE career was busy, I decided to focus my attention 100% in that direction.

ADDED: Don't let the Balloon payment scare you...yet, it says basically the owner of your note (in your case the previous owner) want's you to pay off the home at the 6 year mark. You may or may not be able to negotiate a longer term (not likely, cause if you default, guess what he gets the house, plus your down payment plus you've paid his home for 6 years?!) Owner-carries are not typically in a buyer's best interest...and sellers know this!

First off, contact a good reputable lender and see what your challenges are? Do you have any loans in collections (student, credit cards, medical) Collections are big stop signs to lenders and they will not typically loan while they are active. Loan defaults, whether current or in your past, are also stops signs for lenders, unless the debt is over 10 years old it will dramatically impact your score and lending viability.

How's your debt to income ratio? VA and FHA have what's called front side and back side ratios, which are typically 25%/45% so for example if your monthly income is $1,000.00 (using, hopefully, smaller numbers for explanation's sake?) Front side: VA/FHA allows no more than $250 for credit cards, car payments, student loans, revolving lines of credit and a back side of $450 to include all the front side + a mortgage. VA and FHA will allow down to 640 FICO score, with VA requiring 0% down and FHA 3.5% down. There are some variables and additional fees, but that's the basics.

I'm not sure if you were previously military or not, if not, disregard that option!

For a conventional type financing loan most lenders require decent front side/back side ratio (roughly in-line with FHA/VA; however, one's FICO score must be 720 minimum and they require a minimum down of 10% for an Owner Occupied property. Of course at 10% down you'd have to carry PMI (private mortgage insurance).

OK, as others have mentioned there are credit counseling companies out there. I would stay away unless you're HORRIBLE at budgeting or financing? If you use a credit repair company or similar company, it will prevent you from getting a home mortgage until all the debt they are "fixing" is 100% repaid. I will not go into the ways in which most of the companies can hold you hostage...But, I have seen and heard of more families being hurt by them than helped?!?

I prefer a local Credit Union for all my business referrals and would recommend the same to you, if none are available, them a smaller local bank would suffice. Go and talk with a Loan Officer and discuss with him what you'd like to do and your situation...most are more than willing to direct you in the right direction for the prospect of future business.

Your goals (if purchasing is your primary goal?) is to get any old debt in collections or "written off" settled. You can always call them with a settlement typically $.30-$.40 on the dollar if you can swing it, make it happen. Of course get everything in writing, record who you speak too, dates and times! Then get rid of all your highest interest debt first (depending on balances, whichever one is costing you most). Check your credit from a reputable source (trans union, trw, equifax) get all three bureaus and make sure it is accurate...now that I am writing this I would get one right away and then 30 days after each milestone is reached (pulling your own credit scores, contrary to popular belief, will not negatively effect your credit score, hence why I tell you to use a reputable company...like a credit union, they do charge, however, typically between $15-$45)

Feel free to PM me if you'd like more advise. ANYTHING a credit repair company can do, you can do yourself, better and cheaper!!!

Brett

 

[Pontoon24]

Re: Questions on getting Finances in order.

I have some advice but you probably wont like it.
Having good finances is the result of two things, understanding basic math and discipline.
If you have bad finances then you don't have a handle on either one.
My advice is to learn the basic math to completely understand how to calculate interest, amortized mortgages, and compound interest. Then make the changes you need to to discipline yourself and your spending.
Fail to do that and you will only dig yourself into a deeper hole. There is nothing the credit counseling services can do that you can't do your self except they will separate you from more of your money.

J.P. Morgan once said something like, "Those who understand compound interest are destined to collect it and those who don't understand compound interest are doomed to pay it"

My yearly income is 30 to 35 K or less (lately much less) I own 3 houses and 2 vehicles all paid for and collect interest, dividends and rent and have zero debt. Simple math and discipline.

 

[southkogs]

Re: Questions on getting Finances in order.

Personal opinion, toss it in the "for what it's worth" bin:

Your issue is one of math as said above. Credit scores are fine and have their place, but your issue sounds more like an issue of spending more than you have to spend. You face a problem with that balloon payment, but your situation might not allow you the opportunity refinance in time ... unless you make radical changes.

Start by budgeting what you have, against what you need to pay each month - notice, "what you need to pay" NOT what you want to buy.

After you do that math, allocate what you have left to attack debts and drive them down leaving a little bit for some "wants."

That's the simple version ... it's more complicated than that in practice.

BTW - be grateful you avoided bankruptcy. You can recover, but it's a pain.

 

[tomdinwv]

Re: Questions on getting Finances in order.

I remember a local news story here in WV a while back about a man who tried to use one of these "get out of debt" companies. It was an out of state company. He got ripped off big time. I don't remember which company it was. If my memory serves me right, he paid around 3 or 4 thousand dollars to this company and they took his money and did nothing. I guess the moral of that story is do your homework and research the company you are thinking about using.

Another option besides using a bank is a credit union. They usually have lower loan standards than most banks. Some do not even base their decision off your credit history. It's worth checking into.

I am by no means an expert in finances. Only advice I'm qualified to give is research, research, and research some more. Good luck with your situatuion. I hope you get things worked out.

 

[ezmobee]

Re: Questions on getting Finances in order.

Are you currently behind on your bills? I looked into the CCCS thing once years ago when I was barely keeping my head above water. I was current with everything though. Basically the credit card companies won't cut you any deals unless you're already in trouble. Please do A LOT of research into the CCCS thing before you do it. I'm pretty sure it does damage your credit a good bit. As you've probably already seen, any of the for-profit companies doing the debt consolidation thing are definitely scams. However I think the results from the non-profit ones are mixed also so research research research. Good luck.

 

[joewithaboat]

Re: Questions on getting Finances in order.

If your credit score will allow you to, try using consolidation loans to clear up credit cards, they have simple interest. 15 years ago I used GE capital financial. I have heard lots of scam stories about the CCCS companies.
Good luck!

 

[lncoop]

Re: Questions on getting Finances in order.

Bubba, you have to make your own decision, but I'll convey my personal experience and maybe that will help. Many years ago the admiral and I threw up our hands and called what was then NCCS (pretty sure they're now CCCS, but don't quote me on that. You REALLY need to do your research in order to keep from getting shafted.) because we were tired of getting phone calls about the debts we had amassed. There was no way we could have handled it on our own. They called our creditors and negotiated away thousands in late fees and interest penalties, then they set us up on a monthly bank draft and disbursed the money per their agreements with said creditors. Yes they charged a fee, and yes each account had a "managed by credit counselor" notation, but so what? We got out from under that burden in a few years without having to live exclusively on rice and beans, and while that notation is a bit of a black eye it's nothing compared to bankruptcy or a steady flow of delinquencies and charge offs. And, I can promise you whatever fee they charge will pale in comparison to what you will be out if this drags on for years and years, not to mention the intangible and other tangible benefits, like peace of mind and freed up cash flow. And, FWIW, we've bought two houses, several vehicles, opened accounts, etc. with no trouble. So, if you can get this stuff knocked out on your own that is best of course, but if not, a NON-PROFIT credit counseling agency deserves strong consideration. Good luck Bubba. Hope you get it all sorted out.

 

[bruceb58]

Re: Questions on getting Finances in order.

As a side note, you said you just used an IRA in December 2011 for your downpayment. You do realize that you are going to owe 10% penalty on that as well as taxes on all realized gains right? Do you have those funds set aside for your 2011 taxes?

Sorry if you take this the wrong way but it seems like you are putting the cart before the horse. Instead of adding more debt by buying a house, you really should be getting rid of your existing debt. If there is someway of getting out of this house deal and refunding you IRA, that would be that absolute first thing I would do.

What amount of credit card balances are we talking about here?

I would suggest this book to read:
http://www.amazon.com/Total-Money-M...078X/ref=sr_1_1?ie=UTF8&qid=1327604372&sr=8-1
Probably the best $17 you will ever spend.

 

[tpenfield]

Re: Questions on getting Finances in order.

As a side note, you said you just used an IRA in December 2011 for your downpayment. You do realize that you are going to owe 10% penalty on that as well as taxes on all realized gains right?

There are a few exceptions to the 10% penalty shot, like if it your first home. Taxes on the gains could be a whole other story.

Again, do the math, all the math.

 

[bruceb58]

Re: Questions on getting Finances in order.

There are a few exceptions to the 10% penalty shot, like if it your first home.

If its your first home you don't have to pay the penalty on the first $10K. Penalty on everything else. It's a bad move to use an IRA for a home purchase.

http://www.fool.com/money/allaboutiras/allaboutiras12.htm

If both the husband and the wife have IRAs and both are first time home buyers, that will be $20K.

 

[lncoop]

Re: Questions on getting Finances in order.

There are a few exceptions to the 10% penalty shot, like if it your first home. Taxes on the gains could be a whole other story.

Again, do the math, all the math.

That's another story. Literally.

 

[bruceb58]

Re: Questions on getting Finances in order.

Bob, are you already on the deed for this home or was this a lease to buy arrangement?

 

[Big Bubba]

Re: Questions on getting Finances in order.

Were basically on the dead and were waiting for a copy of it to get mailed to us.

 

[bruceb58]

Re: Questions on getting Finances in order.

So you did buy the house from the buyer so its not a lease with an option?

What does "basically on the deed" mean?