Short Sales

Does anyone have any information or experience with Short Sales?

We are in a situation with our mortgage and it’s one of those goofy ARMs that are maturing soon. We have $ in our budget to compensate for the increase so we’re fine there but we’ve decided to list the house in hopes of moving.

We have our house listed for sale, and it’s listed as a ‘short sale’. My question is – has anyone done this type of transaction before? Any feedback/input you have would be very helpful. Our real estate agent has been very helpful but I’m somewhat uneasy, mainly from the credit prospective, and haven’t been able to find a lot of information online. I sincerely appreciate the help!

I have a lot of experience with short sales. I currently work as a few Realtors right hand person to get them approved by the bank.

Do you know if your realtor has submitted a short sale package to the bank yet?

Just let me know what questions you have and I will do my best to answer them.

The envelope system

I am trying to find out more information on using the envelope system for budgeting. I would appreciate any information or suggestions you might have.

The envelope system is very easy to use and it’s saved us a good deal of money. Everyone is different but here’s how we do it.

We use literal envelopes though some people use separate bank accounts or software that separates money into categories. Into our envelopes, labeled “food”, “gas”, “laundry”, and “entertainment” we put a set amount of cash every time I get paid. We also have envelopes for DH’s business and money that comes into his business funds those. It’s kept in the envelope until there’s enough to cover the bill/expense then it gets deposited into the checking account and a check is written for that bill/expense.

I get paid every two weeks so when I get paid I put $100 for food, $25 for laundry, etc into the appropriate envelope. When the money in that envelope is gone, there’s no more spending in that category until the next pay period.

Watch this video with detailed explanation:

A lot of people move money around in their envelopes to cover a shortage here or an overage there but we don’t. We just use what’s there and no more.

Speaking of the envelope system, does anyone use

I do and like it once i learned how to use it.

Most borrowers know a late payment or high outstanding balance can hurt their credit. But what about frequenting a massage parlor, retreading a tire, or visiting a marriage counselor? Such activities count, too, according to a suit filed by the Federal Trade Commission in federal court in Atlanta on June 10 against card issuer Atlanticus Holdings Corporation.

Question about the sale of charged off & Ch 7 accounts

Has anyone ever heard of a bank taking an account that is charged off and included in a Chapter 7 bankruptcy and selling that account to someone else. I have the discharge papers – so if someone were to come after me for one of these accounts I could prove that it was discharged. So…I do not understand why someone would buy one of these accounts. Please let me know if you have had any experience with this.

Actually, this has happened to me. Most people don’t really understand that they don’t have to pay off an account that was discharged so it’s a good gamble for a mean collection agency. These accounts don’t cost them much to buy, and so if they convince some consumer to pay them, it’s a good deal.

I’ve only had one collection agency try to do this to me, but at least two, maybe three, of these old accounts have reappeared on my credit report with new last reported dates and facetious information. My BK is about to hit the 10-yr mark, so I’m actually expecting many of them to reappear. It’s frustrating for sure because I have to keep disputing with the credit reporting agencies and everyone knows how diligent they are about getting my accounts right. Ha. I saved myself only by getting 5000 dollar loan and using it to pay all my bills. What a relief!

ts my understanding that there is a difference between a “charged off” debt and a “discharged” debt due to bankruptcy. If your account was “charged off its still a valid debt and you still owe it. If the debt was “discharged” by your creditor in a bankruptcy(not yours but theirs) then you dont owe it. I’ve been reading all night about this stuff see my next post…

Received a marriage proposal but have bad credit


I have bad credit. I am working with a debt settlement company, and giving them what I can afford each month, and when enough funds accumulate, they pay off a creditor. I have been on it for over two years, and have only settled one debt…. and I owe $48,000 in student loans, but those loans are currently in forbearance and are not in arrears.

But that isn’t my question. I am considering getting married and don’t want my husband to have any problems with his excellent credit due to my bad credit….does anyone know if there are options to protect him that we could put in a pre-nuptial agreement? He is also a property owner, and he is fine with sharing the property with me. Does anyone know if Nolo Press offers a do it yourself pre nupt? We live in Calfornia. If anyone has any experience with this sort of thing, please let me know.

Debt Settlement Question

Hi Everyone,

I am trying to work Dave Ramsey’s program, and am presently using the debt snowball. (Read here if you do not know what I am talking about)

One creditor has offered me a payment settlement of about 60% of what I owe. I would pay it off in 3 months. My question is: what does accepting a settlement for less than I owe do to my FICO score?

While I aim to get debt free eventually so I can ignore the “I love debt” score, right now I have to care about that score because I desperately need to refinance my mortgage as soon as possible.

I also know that a successfully completed settlement plan would be better for my score than if I were to hold on to the debt and risk more late payments. But I’d still like to know what relative effect accepting a debt settlement from a creditor would have on my FICO score.

Many thanks! This blog has been a saving grace!

I think you agree to the settlement (in writing) with the clause that they will report this as “paid in full / paid as agreed” on your credit. You need that in writing with their signature as well.

Sample of something I have sent: “If I make a lump sum payment of $360 by June 30, 2008, you will release all claims against me arising from this account and will submit a Universal Data Form to Experian, Equifax, and TransUnion deleting the account. ”

I have sent these, but am on first year of debt repayment / settlement, so I don’t know what effect it will have on our credit until I pull another free report next year. But this is what I have read in books and seen on a few websites. Can’t hurt to ask, right?

In my case, this is a fairly old debt. It’s a Visa card I had a $2,000 balance on. It was closed after I made several late payments. I was trying to pay it off in full, but was barely keeping up with minimum payments. And then because of the spike in interest, and then late payment fees, etc., over a period of time, the balance was just not going down. After a few years, I figured I’d paid that $2,000 off at least double. Then I unintentionally went 4 months delinquent … and that’s when they called me and offered me a lump sum deal.

Re: Being sued by Citibank – never been thru this before

Steven, you are doing exactly the right things. Send your response to the suit – to the courts and to the filing attorney. Then, show up on your scheduled court date. Take your documents and all your proof of income, etc. Just explain your situation to the judge as you have here. They are usually very willing to work with you if you show them that you are serious about paying the debt. They may set up a deduction (garnishment) from your wages or they could defer your case for, I believe, six months. The important thing is just what you said you’re doing – don’t hold anything back. Be open and honest with them.

My hubby and I have been in your shoes and it’s a scary place to be. But, it will work itself out. Good luck!

I totally understand not wanting to do bankruptcy but sometimes you have to do things to get what you need. We did not want to but we went to our Pastor and asked what our Pastor thought since she hears from God alot better than we do at this point.

We were 70,000 in debt and are now in the middle of it. Not sure what will happen and by that I mean a 13 or 7.

Make sure you have a good attorney and claim this your year of JUBILEE!! Stress will hurt you, your body, sleep. etc. Trust me about that.

Being sued by Citibank – never been thru this before

Hello everyone,

My name is Steven. I’m going to give as much relevant information as I
can, in asking for input.

– In 2000 I was making about $120,000 a year, had money in the bank, etc. working as a consultant in the financial district.
– My credit was excellent.
– purchased a home in Rockland County, NY.
– In 2001, I lost my business after Sept. 11th. There was simply no consulting work on Wall Street for corporate trainers for about 3 years.
– I worked odd jobs, making about $30-$40,000 per year, borrowed money to keep my home, then sold it when I could. I went thru all savings and retirement, and ended up with significant debt to keep my home payments up (using lines of credit) and help family during financial crisis (never dreaming my career would never return).
– The consulting business changed – interactivity and instructional design made me mostly obsolete – so I left that line of work and began working as a counselor and musician, and eventually a minister.
– Sold my home in 2004. Broke even after paying $20,000 to creditors. STill about $40,000 in debt.
– I moved upstate and rent. Still make about $40,000/year.

– In 2004, I sold my home.
– In 2004, due to a fluke – I got a consulting job and paid back most of my debt. The job ended before I was able to pay all my debts before selling my home and moving. I still owed about $20,000-$25,000 in unsecured debt as of 2005, when my job ended.

– Went back to making $40,000 per year or less.
– Unable to pay creditors much of anything since early 2006.

One last detail. In January of 2007, I was a passenger in a serious accident. I broke my hand and ribs and damaged by back. I was out of work for 4 months. I was overwhelmed with bills, etc. – unable to pay any debts since then, basically. After a year, my concentration returned, I’m a 95% back to normal; stamina has returned.

– In 2007, a writing job I had ended due to my car accident. At that point, my already small income decreased by $1,000 per month.
– In early 2008, a small computer job I had which paid me about $500-$1000 per month ended. I have made up the income by teaching music wherever possible.
– Important Note: Corporate Training skills have changed, and my skills are out of date except for traditional classroom training. For that reason, I am no longer marketable as a corporate consultant for most jobs. My skill set for “instructional design” and “interactive training” is not sufficient any longer.
– I’m out looking for work constantly. Whatever I can do in my field of teaching (adult ed); and ministry (I’m a substitute minister at a church, but it is mostly volunteer… however, I am a doctoral candidate (can’t complete a doctorate now for financial reasons) and I perform weddings, funerals and services for money whenever I can.

I am being sued. I was served papers by a creditor on Saturday, June 28th. The principal balance on the account was about $12-15,000. The creditor said they would accept a $10,000 settlement. But I was unable to pay ANYTHING – NOTHING. They sued for $28,000.

I need help making a reply and trying to get the amount adjusted. I’m still making very little money and cannot make a payment at this time, but I am healthy and constantly looking for additional work. I am teaching now in Adult Ed programs, and have a 1/2 time job as music minister in a local church. I also teach privately. While I am not making more than about $3,500 per month GROSS, things are looking brighter. More jobs inquiries are coming my way. I am very hopeful I can start paying off these debts again soon.

I don’t know how to tell a judge that, how to file an “Intent to Defend” Notice. I’ve never been in court over money before. I made up an “Intent to Defend” and am calling the court to see if I can deliver today.

I have proof of my current income and expenses; I am holding no information back. I have tax filings from 2006 and 2007, to take to court. They will see, there’s nothing left over at this point.

I trust this is enough relevant information. I need to reply to the court and to my remaining creditors. I have every intention of paying the principal back or negotiating reasonable settlements. Given my circumstances, I just cannot pay right now. I have failed at getting them to understand this.

Thank you for any advice.

Steven J

PS. I stopped taking calls from creditors several months ago. I have sent them all letters to explain my financial situation. I cannot borrow money from any source to pay down any of these debts. I must generate the money to pay back my remaining creditors.

PPS. Bankruptcy is still not an option. I want to negotiate and pay creditors as my income increases. In addition, an attorney advised me not to file while I had a pending accident case.

How does one get out of debt?

Hi all,
For those of you who have freed yourselves from debt, what are your thoughts on the best methods and what methods have worked for you.
Thank you for your thoughts.

What I’ve noticed is that the way things are set up to get you into debt. For example I’ve switched my online server to the same as my phone so that now it’s a bill and not just something on my already staggering credit card. I have a calander from microsoft works that I print out and write all my bills on. My husbands pay is also marked on there so I know when what bills need to be paid by.

On the mortgage week we need to leave money over because we don’t have enough for groceries on that week. We’ve recently paid off a 10000 credit card and are now working on a smaller and (final) card that we used for our trip to Disney (it wasn’t my idea I wanted to wait until we had the money saved up but got vetoed). So my other suggestions is to have one credit card for long term purchases like a trip to disney and another card for online purchases. That card I had them reduce the credit limit to $500. This is the one I use to online purchases and when my husband gets paid (not the mortgage check the other one) this gets paid off totally. If I don’t have money for gas then I have to stay home. It’s about modifying your behavior.

When I add up my husbands pay and subtract the bills the amount gets divided by four. That’s the money we have to go on. If we get an extra check (sometimes we get small check from stocks) that money goes into the savings. It’s small but it did pay for the emergency $800 water heater that just died. I’m really proud that I had the money and didn’t have to put it on a card. When the last credit card is paid off I’m going to start putting money in our savings account first and then work on our IRA. The only way I’ve found to pay off debt though is to change spending habits and lower bills.

If when you add up your bills and expenses (and yes we’ve been there too) and the numbers don’t work you need to make decisions about what you can get rid of… if you can’t do that they you need to work more it’s just the way it is.

Re: Old debt – Need help

a) anything from a collection company has to come in writing with signatures…. (but you already know that).

b) I think you are back to square zero with these guys. From what I see, you went from 3500 to like 1500 and are now back at $3K? Wait until you have $750 in hand and offer them (in writing) a settlement payment of $750. (25 cents on the dollar)

Send them a letter:

Wait until they return it signed before you send them a copy of the letter with your signature and a money order.

Watch this video to get the idea:

I would recommend ordering a copy of your credit report from the credit bureau. From my uderstanding if you apply for credit and get turned down, you will get the turn down letter from the company you applied with it will have the credit bureau they obtained your credit report from. You can then call the credit bureau’s number on the letter and get a free report.

Once you receive the report, review it and look for the account(s) they are referring to. If it is on your report, contact the collection agencies and ask them to provide documentation for the debt. Once you receive the documentation, if you have the bank statement, receipt or cleared check to prove proof of payment. They then have no other choice but to update it paid. You can also contact the credit reporting agency and provide documentation to have it upated on your credit report. A form will come with your credit report for disputes. Another good thing to do is contact your state’s attorney general’s office about this, they might be able to help provide some type of advice on what to do.

Update – You no longer have to get turned down for credit to get a free credit report, see

Old debt – Need help

Hi, I have a question.

About 8 years ago I had fallen behind on a store credit card from a major retailer. I would get call at home asking me to make payments, which I did. My payments were slow, but I was trying to settle this debt. One Saturday a credit rep from this company who I had worked with before, (he had set up a payment plan previously)called me at home called me and told me that the company was about to take legal action on my account. My balance was about 3500.00 at the time and the account had no line of credit. I had told him that I could continue to make my payments, and offered to pay 1 minth in advance so my payments would not be late.

He offered me a settlement/pay off arrangement. I was told that if I paid something likr 1978.65(not the exact amount)the company would write off the balance, because what I was payming at that time was interest and fees on the accont. He really pushed this as my last option to avoid paying court cost, attorneys fees, ect that would basically triple my debt. He gave me a window of two days to send my payment. I paniced and scraped the money together and made the payment. The next month I received a bill but did not look at it (my mistake) because I had at that point three accounts that were paid in full that I continued to receive a monthly statement for.

Well 4 months later this company called and told me that my account was seriously past due. I told the lady that the account had beed settled and she said she was unaware of that but she would research the claim. Three months after that, I got another call from a different lady who was askin for a payment. I explained the situation to her, and she informed me that the account had been researched and no settlement offer was ever made. She did see my payment, which she stated was odd, because I always paid in $10.00 increments, my apyment was always received in the latter part of the month and this was within the first week of the month. We talked for almost an hour, with me insisting that I had accepted a settlement offer and her stating that I still owed a debt.

She took my number and called me back a few hours later. She stated that the individual who called me to make the settlement offer was no longer employed with the company because of some of the tactics he used to make collections. She state that she believed that I had acted in good faith but that no valid offer had existed. She informed me that a true settlement offer involved the debtor signing some form of agreement prior to remitting payment. She stated that although she empathised with me, I was still legally responsible for this debt. She then set up another payment plan which I refused to accept, but I told her to send the next bill.

I consulted an attorney, who advised me to make the next payment and that he would look into the case. (mistake #2) Yup, the attorney did nothing, dispite the advertised free consultation and analysis. When I called back, after I made the payment he advised me to seek help from the local law school clinic. I wrote to my credit bureau, but never saw anything in the report. I made some payments, but then I stopped receiving bills. Next thing I knew, my account had been sold to a collection agency. They were demanding a payment of 2500 or two payments totaling 3000, or they would take me to court.

I argued with them about the validity of the debt, only to hear nothing else until 4 months later when another collection agency called me. According to my credit report this debt will stay on my account another 2 years, and there have been atleast 6 collection agencies who have contacted me over the years. Is there anything I can do at this point. I see where I made each mistake so now I need to know how to go from this point on. Any suggestions will be appreciated.