Can't Pay Creditors

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BenRosa

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Greetings:

The housing slump is hurting me to the point where I can no longer afford to pay the mortgage on an investment property. It is my initial foray into this type of investment…and I feel as though I’m on a slow moving train about to wreck. Although I’m a novice at real estate, I suppose I should have researched all angles more closely. At the time however, real estate seemed unbeatable.

My intention was to get my family out of a rough financial spot…now, it seems I’ve put us into a much tougher situation. I just feel awful about it as I’ve never been in a situation in my life where I could not pay-back what I owed, even if just a little at a time.

Anyway…I’ve been praying about it…constantly. I certainly learned from this venture, not to put the family treasure at such risk. I wish (and pray) that I alone be the one to suffer…as my family had nothing to do with this decision…but they’ll suffer the consequences also.

Was my act of imprudence sinful? Should I have know better? What can I tell my creditors?

Thank in advance for any and all guidance…
Ed in Tampa
 
I stay in debt alot! I usually just trust God to provide, and even in my debt I give what I can to the Church, and somehow everything seems to turn out alright. I am honest with my creditors; I will tell them flat out I cannot pay what I owe, but will do all I can. Usually if they see you are making an effort, they will work with you. They do want to keep your business (and money!) so they won’t just cut you off if you are sincerely making an effort. Anyways, I will pray for you, and have you considered humbling yourself and seeking assistance at your parish’s mission or St. Vincent de Paul society? Remember that our brothers and sisters in these areas do what they do because they love to help others!
 
BenRosa said:
Greetings:

The housing slump is hurting me to the point where I can no longer afford to pay the mortgage on an investment property. It is my initial foray into this type of investment…and I feel as though I’m on a slow moving train about to wreck. Although I’m a novice at real estate, I suppose I should have researched all angles more closely. At the time however, real estate seemed unbeatable.

My intention was to get my family out of a rough financial spot…now, it seems I’ve put us into a much tougher situation. I just feel awful about it as I’ve never been in a situation in my life where I could not pay-back what I owed, even if just a little at a time.

Anyway…I’ve been praying about it…constantly. I certainly learned from this venture, not to put the family treasure at such risk. I wish (and pray) that I alone be the one to suffer…as my family had nothing to do with this decision…but they’ll suffer the consequences also.

Was my act of imprudence sinful? Should I have know better? What can I tell my creditors?

Thank in advance for any and all guidance…
Ed in Tampa
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Your creditors do not want you to default, because in the long run they end up selling bad debt for a lot less than they would have got from you.

Your responsibility however, still remains.

Why not call them and explain the situation? This is something a lot of people are going through in the U.S.A right now, and facing the problem is one step towards solving it.

Any type of investment has an amount of risk involved with it, so (for future investments) one needs to judge whether or not they (and their family) can afford to lose the money in the worst case scenario.

I think you should speak to your priest about it. You cannot be the only one in the parish with such a problem, and I am sure he will be able to guide you far better than any of us.

In Jesus Christ,
 
Successful real estate investors use cash and look for low sale prices. Sounds like you listened to the Carleton Sheets tape set and took the plunge when you weren’t stable enough or ready. Ouch!!!

I suggest you start listening to the Dave Ramsey show, check out www.daveramsey.com for radio stations in your area or listen for free online from his website. His books and the Financial Peace University are also very good. This will get you back on track with your finances and learn a lot about what you need to do, in what order, to give true financial stability and prosperity to your family. I am a big fan and he has really made a huge difference to me and I think you will benefit a lot. He’s Evangelical but it’s not as smarmy as Crown Financial Ministries/Howard Dayton, he’s very common sense. He also went broke in real estate investments and so he’s been where you’ve been.

I do hope you follow through on this because you’re in the exact teachable moment to really hear the message and learn something and turn it around. His show is taking a lot of calls on real estate crash situations right now and you’ll get practical short-term help from it for this emergency, as well as how to do better in the long term. Quit doing stupid and start doing smart. This is a new beginning for you.

Basically, drop the price on the investment property and sell it ASAP, and talk to your bank about a short sale without recourse. Once you have an offer, they might be motivated to cooperate with that plan. “Without recourse” is very important, because it means if you’re “upside down” on the house, you won’t take back a note to finance the difference. The FL real estate market is in the tank, desperately so, and speculators (like you) drove up prices and now the bubble has burst. So yeah, you might owe more than you can sell it for in today’s market. But if you have an offer, the bank is probably motivated enough to consider a short sale without recourse. They don’t want to end up with a lot of foreclosed properties in a slow market.

It’s scary to be upside down in a house, but your burn rate is how short you are each month in making that mortgage payment, and if you hold on for a year or two, that might be about the same as the gap you’d have to cover anyway. Just sell, get a high octane realtor, offer additional selling agent bonuses, whatever you can. Forget the cheese, let me out of the trap!

What you’ve been hearing on the news about mercy on homeowners doesn’t apply to you because that deal is not for investors/speculators, it’s for owner-occupied.

I haven’t been through this particular pain but I’ve been through other types of financial pain, so I am sending you hugs now, and trust me, this pain is the beginning of wisdom. God bless you.
 
kentuckyliz said:
Successful real estate investors use cash and look for low sale prices.
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Greetings:

I realize now I was in a vulnerable state when I made this investment decision. It wasn’t that we had discretionary income lying around…we were already in a tight spot, and this, I believe clouded my better judgment. Perhaps that is not sinful…since my intentions had no malice. Hopefully, it not sinful to be a poor investor.

Thank you all for the great advice. I know that putting my concerns and questions to this forum has always generated a wealth of wise advice and guidance. Catholic Answers forum is truly a solid investment of time.

Thank you also, for the many public & private intentions for pray of my situation. I do believe in its power to positively affect…though we may not see it immediately or in our idea of what that affect should be.

May His hand be over you all today and always…
Ed in Tampa
 
I suggest that you contact the Homeownership Preservation Foundation at 888-995-HOPE or go to www.995hope.org.

They will get you counseling on options for dealing with a delinquent mortgage. There are various loss mitigation tools that you can use to try to keep the property or to sell the property without going into foreclosure.

How you got into this is water under the bridge and a lesson learned. Please call them and get educated on what you can do now to move forward.
 
BenRosa said:
Greetings:

The housing slump is hurting me to the point where I can no longer afford to pay the mortgage on an investment property. It is my initial foray into this type of investment…and I feel as though I’m on a slow moving train about to wreck. Although I’m a novice at real estate, I suppose I should have researched all angles more closely. At the time however, real estate seemed unbeatable.

My intention was to get my family out of a rough financial spot…now, it seems I’ve put us into a much tougher situation. I just feel awful about it as I’ve never been in a situation in my life where I could not pay-back what I owed, even if just a little at a time.

Anyway…I’ve been praying about it…constantly. I certainly learned from this venture, not to put the family treasure at such risk. I wish (and pray) that I alone be the one to suffer…as my family had nothing to do with this decision…but they’ll suffer the consequences also.

Was my act of imprudence sinful? Should I have know better? What can I tell my creditors?

Thank in advance for any and all guidance…
Ed in Tampa
Click to expand...
Hi Ed–we are neighbors. I live about 15 miles north of Tampa. We are renting our home from a man who is dire straights, as well. He wants us to buy the home, but I’m not about to give him what he paid, when I feel what he paid was too high. He, too, saw the real estate boom, and got in on a few homes. What he did was he gave his other homes back to the bank. This is not quite the same as a foreclosure. A foreclosure can hurt your credit–he said that this doesn’t quite do the same thing. And, plus he is out from under the payments.

Now, to the moral aspect…if your motivation in buying a home for investment purposes was greed, then yes, it probably wasn’t a prudent move, and it probably was sinful. But, you sound like you truly wanted to help your family–and that is admirable! Sometimes, we make bad business decisions–God doesn’t expect us to be psychic. Your intent was to help your family, and it did not work out…I would seek financial counseling, or a real estate lawyer…hey, I have someone you could call, who we talked to in the past when the owner of this home was threatening us to move out.:rolleyes: He works for one of the best law firms in Tampa…The name of the firm escapes me, but I’ll send you his name and number in a pm tomorrow, ok? He was so good with our situation, that the guy who owns our home never brought it up again when I told him who I consulted. Sometimes, you need to consult a lawyer to tell you your options.

Re: your creditors…it is important to pay your debtors. I wouldn’t look at it as stealing, as the above poster mentioned. You didn’t intend to not pay your creditors. However, there are so many ways to consolidate payments and exhaust one’s options, rather than simply not paying your creditors. God always provides, and He can move mountains. He will help you to move this one.

You’re in my prayers.
 
Magicsilence said:
Your creditors do not want you to default, because in the long run they end up selling bad debt for a lot less than they would have got from you.

Your responsibility however, still remains.

Why not call them and explain the situation? This is something a lot of people are going through in the U.S.A right now, and facing the problem is one step towards solving it.

,
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Exactomundo.

They are likely to work something out as long as you can make some sort of token payment until things improve. Worst thing you can do is to keep them uninformed about what’s going on with your financial situation.
 
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