A close friend (I know, I know...srsly, not me) is in dire straights and doesn't like my offered solutions so I'm hoping maybe there is another path for which I am unaware and smart PF folks might be able to illuminate for us. Here's the situation...
Single-parent (we'll call them "Friend") with terrible finance skills was recently laid off from a good job, but was already drowning before unemployment.
Debt:
Mortgage - ~$190,000 owed (payment ~$2,000/month w/ taxes)
Car - ~$500/month (little to no equity due to poor lease buyout deal)
Motorcycle - ~$450/month (underwater significantly ~$4000)
Credit Cards - ~$10,000
Equity/Income:
Savings - $0 (nada. nothing...le sigh)
Severance - ~$15,000 over the next 11 weeks (including health insurance extension...not COBRA...for Friend and child which is 100% covered, thankfully)
Child Support - $1000 monthly Home - House could potentially have $100,000 in equity due to market and the remodel that was done after the purchase.
So Friend has been drowning for almost 2 years now. Late payments on the mortgage and motorcycle are the norm. Dealership wants 2 months of motorcycle payments by this weekend or "else". Selling the motorcycle privately is literally impossible as Friend cannot buy out the title due to how far underwater it is.
Property was purchased for $170k with $30k rolled in for renovations done. Home could bring $300k gross on a good day, but likely less due to some outstanding issues. Conservatively, I would estimate that Friend could clear $260k after a reasonable sale.
Friend is in default on mortgage and certified letters arriving stating that they want to send a representative out to help Friend figure the situation out. Friend is extremely stubborn and was avoiding the mail carrier so as not to sign for said letters until my dumbass was there one day and signed (my bad). Friend was pretty pissed.
Given the situation, I've been pushing as hard as respectfully possible for Friend to sell the home ASAP while the market is hot, take the equity, pay off as much debt as possible and try to start fresh.
Friend is extremely hesitant to sell for a number of reasons including the fact that Friend obviously has terrible credit. Friend also owns a slew of animals (4 dogs, 3 cats, 3 rabbits) and regardless of cash in hand will not be able to find a place to live nearly as nice as current home. Regardless, I've advised Friend that none of that will matter if the foreclose on the house and kick Friend, child and all of the animals out. Might as well cash in before they cash you out and you get nothing!
The motorcycle is a quandary for me. Can't sell it private sale w/o someone to buy out the title and absorb the debt. Giving it back to the dealer will reduce debt, but will still require ~$5,000 in fees and loan clearance. Repossession is even worse due to added fees.
I've not mentioned Friend about filing for bankruptcy yet as I'm not very familiar with the subject at all, but I'm wondering if that is an option for Friend?
Sorry for being so long. I am trying to provide a big picture with necessary details. Personally, I don't see many options out of this mess other than selling the home and digging out bit by bit, but that's why I am here now.
Any advice from y'all? Thanks!!
edit: formatting
Submitted September 05, 2018 at 08:46AM by xm3shx https://ift.tt/2MRq0yY
