What's our best options for starting over?
To start, I'm very interested in REI, but have to clean up my credit first. Here's my situation. 
We are about $75k in debt (student loans $20k, back taxes$10k, 3 cars $35k, credit cards $10k , and a few medical bills $1k). Our house is worth about $80k, as is, but with rehabs may be about $110k. We've submitted 'offer in compromise on the taxes, and deferrment on the student loans. No determination on those yet. We just haven't had the money to do it. We have 2 teenagers and we live in the boonies, so we need at least 2 cars (3 people working). Our gross monthly income is $4k, which 18mos ago was $7k (lay off). The interest rate on the cars and credit cards is very, very high. All being 18 to 25%. Latest credit score was in the upper 400s, so refinancing has been very tough. Right now we're strongly considering bankruptcy. What do you think are our best options?
Also, how does debt consolidation differ from Ch 13 on your credit report?
First, any opinions or advice received from these posts, including mine, are just that, opinions, and should not be considered professional advice. You should talk with a certified financial planner or attorney before committing yourself to any plan of action. Now that the legal stuff is over.
I can see that getting new loans would be very difficult with the low score. I'm assuming that the home is owned free and clear, too.
First, I'd read all the articles here concerning credit repair and financing with bad credit. Do an article search and you'll pull several good ones.
If you can, sell the extra car. Don't try to make money off of it, just get rid of it. If it is overfinanced, however, it will be much better to keep it than letting it go back.
If you try to borrow against your house, don't ask for more than 50% of the appraisal. That should get you enough to consolidate about half of your debt. Lenders will be more likely to approve it because of the low LTV.
I'll give no opinions on declaring bankruptcy, but you should know this. Lenders view bankruptcy as so many years out of. Example: Declaring bankruptcy in 2000 means that you would be 3 years out of bankruptcy. However, most lenders view Debt Couseling Services as bankruptcy, year one. That is, if you go through one of these services, have paid faithfully for 5 years with only one more year to go, a bank will still view you as just declaring bankruptcy.
Good luck with your efforts.
Roger
E-mail me if you like for some advice. (a9601@aol.com)I am not an expert, but can help some and can direct you to some very free experts! Don't consolidate until you consider bk. It is sometimes worse! It could hurt your scores more. You should be able to bring those scores up if you can pay the minimum bills on your cr.
Can't help much with the big picture, but in case you don't already know, many student loans are eligible for forbearance (interest still accrues though, but you don't need to make payments) or, better, an unemployment deferrment (you mentioned a layoff), during which no interest accrues and no payments need be made. Call your st. loan lender for details.
I joined a program that helped me to reduce and shave the time off mortgages, car, and credit/charge card payments by years and saved me thousands of dollars in interest WITHOUT INCREASING WHAT I WAS CURRENTLY PAYING! email me at merlin2858@aol.com if you want to hear more since I don't know if it would be appropiate to discuss on this forum because it may be considered advertising.
From
Blaize
Blaize, I don't know the program you signed on for, so any comments I make are just general. Consolidation is good if you can recover with help from your debts. It will hurt your credit. It took me tooth and nail to drag out an agent to tell me that yes, this would be reported as debt counseling,negative. From that point, I searched out people who had been involved with the service. The stories were not good. Yes, the bills became more manageable, but their credit was made MUCH worse. Some people have even stated Bankruptcy was a better option for them even though it sounded extreme. I know people that have purchased homes after 2 years of BK. It's certainly a personal debate and choice. One has to weigh the hurt credit to the debt relief. I would never judge anyones personal issues, just think there is a lot to know before you jump. Good luck all!
Hi Ginger
This program is a new internet-based monthly subscription service that helps people to manage and protect their money and pay off their debts in an optimal way. It creates wealth from debt and is NOT a credit repair or debt consolidation program. It is unlike anything that has ever come before and its patent-pending.
Blaize
Ok number 1 there is no thing as a service that is optimum for reducing your debt and makeing payments manageable without destroying your credit. You stated that your fico was in the 400's? and you have debt through your ears??? I normally dont tell anyone that bankruptcy is an option but in lew of your circumstance I would suggest that BK is you best option. I mean it cant really get any worse than a fico in the 400's. Remember this a BK is bad but it can protect your house and car. Do not even think about a credit consulting agency. The trick is here that negative items stay on your credit 7 years from date of last activity. A credit counciling service will tell you you can be debt free in 5 years. This may be true but then its a additional 7 years after your debt is paid off to be removed from your credit. Thats 12 years before you can begin looking at any type of decent credit. Any questions please e-mail me at **Please See My Profile**
Tuxman
Former credit repair specialist for 10 years.