You need to sell off whatever you can so you can pay off whatever you can and then go from there. I can see possibly keeping one old car, but the rest are a luxury that at this moment you can't afford. Then let's see what the debt is left over after that. I'm certain it will be more manageable. You may even need to consider selling the house and moving. Not judging here at all, but all avenues must be examined.

I learned about balloon payments 40 years ago in high school economics class. It has to be written into the contract, so maybe you screwed yourself by signing it?

Like I said, I got out of a deep (to me) hole. Here is well reputed non-profit who can help people in debt. I attempted to negotiate with creditors on my own, and it was either minimal, or no assistance. They jacked rates because my debt did not reduce, not that I ever missed a payment. Once that hits your credit report, all your charge account creditors follow suit and jack to max. No way to dig out then at the 14-21% rates.

https://www.moneymanagement.org/

I have yet to have anyone listen to my example, or do what I did. Nobody seems to be able to picture a 4-5 year plan that includes NO credit cards to charge to. Or a commitment to living very frugally. Like one movie out a month. Period. It can be done. I didn't stick any of y'all with my stupidity.

Oh, and if nothing else, here is a hint: HARDSHIP is actually a legal term, and MUST be used in discussions with creditors to get their attention.

Sorry to hear about your business. Auto repair is a rough business....especially when there is a shop on every corner and these newer cars are getting harder and harder to diagnose and repair.

You know, I don't agree with the people who blame creditors for extending loans. Everyone who took a loan had to read, understand and sign what they were agreeing to at the time, and everyone has the responsibility to think about their own situation/future and decide for themselves whether that loan is realistic or a good idea. Just because someone is willing to extend you credit or a loan doesn't mean you have to take it and agree to it. Thus, I feel there is at least equal responsibility on both sides, if not even slightly more on the side of the person taking the loan. The bank can look at your past history and assess risk based on that, but only you know your future plans, your level of willingness to work hard to stay out of trouble, etc.. Putting all the blame on banks for giving out loans is ludicrous, and not knowing the terms of your loan contract is 100% your own fault. I'm not trying to be an ass, just telling it like it is.

Obviously he can and probably should sell his toys and luxuries to pay off his debt. That's such an obvious point that I didn't even feel it was worth saying it, because it should be the first thing that comes to anyone's mind in this situation. I know, because I've been there and had to sell some things that I never wanted to sell, because I made bad financial decisons that put me in a bind. But I sold some things off, lightened my load extensively and lived extra super frugal for a couple odd years(a movie a month?? Try not even once for years!) and now I'm back in good shape again.

But I also know the reality that credit card companies are always willing to negotiate, especially since they know that a decent chunk of that debt is surely interest that they are willing to forgo if they can get back what you actually charged at least. I also know nothing about the OPs earning potential going forward, or his spouse's earning potential/willingness to help him dig out. If the future looks bleak, then by all means sell off whatever toys it takes to get caught up, and if that doesn't even get you caught up you have to start making some money and live extra frugal. To me this should be obvious, hence why I didn't see the need to go over it.

But whatever you do, whatever route you take and decisions you make, they need to be based on logic and reality, not emotions, not spur of the moment quick decisions. You need to take some time to think about it, and the reason I suggested an attorney is because they will give you their advice from the standpoint of someone who is not emotionally involved in your situation. Friends and family and such often give horrible advice, sometimes out of ignorance, sometimes out of false hope for the best, sometimes because they simply don't want to hurt your feelings. An attorney is going to give it to you straight. It's like with relationship advice - do you ask your best friend who you know is always on your side of the argument for an unbiased opinion, or do you ask someone who is in no way involved and has no incentive to tell you just what you want to hear?

Bottom line: If your future earning potential is low and you're going to struggle and very possibly fail to get caught up, you need to sell whatever you have to and make as much money as you can to pay back. However, if you have legitimate, honest reason to believe you can make a healthy payment plan and stick to it without fail, then you should try negotiating as a first step. It's really not all that difficult if you keep a calm head about you and use logic and common sense.

Selling stuff off is obviously the easiest way to make quick money to pay them back. It also hurts the most. Again, believe me I know. But working out a repayment schedule over time is a very big committment that you MUST stick to and you need to be absolutely sure you can commit to it before you decide to go that route. Not everyone can do it. You need to look at your situation, your future and figure out for yourself whether that is realistic or not.

Or just sell everything, be done with it, figure out your next phase/path in life and rebuild accordingly.

Or, and again I'm not trying to be an ass, but do what I would do: Figure out what's going wrong with that shop and fix it. My experience was just an hour or so away from you on the other side of the Altamont, and it was vastly different than what you describe. The good shops that do good work have more work than they can handle. The bad shops go under. I'm not inclined to believe that the market is really that different in Modesto than it is in the tri-valley.

The market out here is a lot different than the bay area. 1) People don't make the money they do in the bay. 2) It is very competitive as there is a shop on just about every corner. 3) Rent and overhead is high but shop rates are low... a lot of shops are $80 and hour as opposed to $120 in the bay..

His shop is in an industrial area that doesn't get a lot of drive by traffic.... I think that is hurting his business IMO. I'm in the same situation with my shop.. The difference with my shop is... I also own a used a lot and run all my cars thru the shop which keeps it afloat...plus my overhead is extremely low.

If I was him I would try and trim my overhead and move to a better location.

I would negotiate directly with the credit card companies or with a nonprofit debt consolidation company to set you up on one of your plans. When I went thru my ordeal my brother a banker at the time flat out told me that if I got a collection on my credit whether I paid it or not it still showed up to creditors as a collection. So there’s that

Not paying your cards will demolish your credit, as stated above. I would sell assets before I went that route.
Any chance you can land a decent paying gig in the meantime?

I think it was said earlier but I think you need to decide on your future plans first. If you destroy your credit expect to live on a cash only basis for a long time. For some people that works out just fine if you are going to move in with family.

If your planning on moving into an apartment and need to sign a lease, if you are going to need credit, etc it is a completely different situation.

Whoever talked you into the loans or tricked you or whatever doesn’t matter anymore. I took a loan against my GTO to consolidate cc debt but I don’t know that is an option for you. The debt is still there, just at a lower rate.

I would look at best case / worst case scenario. If you sell the cars does that get you free and clear including the house? If not maybe you can refinance after getting rid of the cc debt. That is best case and will probably add years to your life.

Worst case is that you keep stressing yourself out juggling debt and in the end you lose everything anyway.

Curious as to the state of the cars? I don’t care what they are, but are we talking cars passed down through family? completed or projects? Desirable or hard to sell? Are they replaceable?

Is the house a keeper? I would think if you and the wife (different if you have kids and need to be in a certain school district) moved into a small apartment you would be surprised how much you could save.

Some very good points above, but one thing I would differ on is moving from a house into an apartment. Continuing to (hopefully) build equity into a home is always better than pissing money away renting. After every house payment, you are that much closer to owning the home, or at least having some solid equity. Every rent check for an apartment is gone, with nothing left to show for it except that month's roof over your head. As soon as you move out, you have nothing left to show for all of that rent paid.. I would far, far sooner sell replaceable cars and toys and such before I'd give up on a home, if that can be at all avoided. It's a hell of a lot easier to buy those cars again later than it is to get back into a home after a credit disaster and potentially a big pay cut. So that's my stance: Keep the home at all realistic costs, but sell off all the toys and such. Cut back on all extra expenditures. Eat cheaper food, no new clothes for a good while, no new smart phones, etc etc etc..

X2,keep the house!Tom

Thank you!!! Nothing beyond this needs to be said. I certainly sympathize when someone falls upon hard times, but you have to redeem your debtors, at ALL costs. The credit card company should not have to write off your bad decisions just so you can keep your prized posessions. You owe them, PAY them, just as you'd expect to be paid by someone who used your service.

Any moral man would do everything in his power, including selling his house, to satisfy the agreements of his loans. End of story. But that's just me. How ever you work it out I wish you the best.

I wouldn’t sell my house over credit card debt but that’s just me.

I agree on keeping the house if it’s feasible. I should have clarified- the first choice would be to sell the cars to keep the house and refinance the second mortgage.

The other option is to sell the house to get out from under the loans,then move into a MUCH cheaper apartment. I’m thinking 2500 in house payments vs 900 in rent.

I would just be realistic. If you can keep the house certainly do it. If not I would think you would be better off with no house and no debt than a house an uncontrollable debt.

Here's the thing.. there's plenty of time to make a decision here. Even if you simply stopped making payments on your credit card(s) tomorrow, the situation wouldn't escalate to the point of having to go to court for at MINIMUM some months. Realistically it takes a LONG time before credit card companies will take it that far, especially if you're making some effort. Thus, you should have time to figure out your situation, find suitable replacement employment and start to have a pretty good idea of what you can realistically afford to do moving forward. Then and only then would I even start thinking about whether or not you can afford to keep the house. There's zero reason that subject even needs to come up unless it really starts looking like keeping the house will be unrealistic.

I absolutely agree with everyone that says it is his debt and he should do whatever he has to do to pay it. The only difference being debated here is the best way to go about that. Having a fire sale tomorrow is certainly an option, but it is not the only option, despite what some people seem to think. It is also not necessarily the smartest option, again contrary to what some people might say.

We're not talking about having taken out a handshake loan from your best friend, and he really needs the money back to feed his own kids. We're talking about humongous banks and credit card companies that deal with this every day, where situations like this are extremely commonplace and part of the job when you are a professional, mass market lender. Whether he pays them back tomorrow, next week or next year, they're getting paid and they'll be just fine regardless. Thus, I would not at all feel the same obligation to conduct a fire sale to pay back a credit card company, vs. paying back a close personal friend or family member who really needs the money back just to feed his own family. If anyone wants to play moral police on that, that's their right, but most people don't see credit card debt/business loans in the same light as friends and family loaning cash over handshakes. There's no lifelong friendship at stake when negotiating with a credit card company, so I feel no obligation to treat them with the same priority as I would my own family and making sure my living situation is secure as well.

The fatcats sitting at shiny desks in big office buildings getting VERY rich off of mass market lending aren't giving up their own homes to lend out money, so I wouldn't give up my own home to pay them back today if I knew I could realistically pay them off over a reasonable amount of time. If they can't accept that, they can take a partial settlement at a far later date then. That's the risk they take in the mass market lending business.

Do you think big business is always moral? Yeah, no.

When I went thru my 1st divorce I couldn't pay on my credit card as I ended up having to pay it all off for both of us. :mad: So I called the credit card company and explained what was going on and I'd pay as much as I could each month even tho it wouldn't be the amount on the bill they'd send. The lady I talked to said ok as long as you pay something. It took me about 8 months and I finally paid it off. It hurt my credit but finally that cleared up. It's better that way than having a collection agency coming after you and hounding you to death.

So call you debtors and explain what's happening and you'll try to pay on your bills. Even if it's a small amount each time. They don't want you to not pay them at all or go bankrupt, so they'll work with you to get payments. Hey, a little is better than nothing.

The banks actually make more money if you don’t pay the debt so they don’t care either way and they are not your handshake friends. If you don’t pay they get to write it off their business as a charge off that ultimately lowers their taxes by the debt amount plus an amount that they project they would have received in interest. Then they SELL your debt to a collection agency. Notice it’s never the actual credit card company that calls you it’s always the collection agency. When you don’t pay them they sell your debt to an even smaller collection agency and on and on until you get that ridiculously low settlement offer. They are not your friends and don’t care.

They also can’t come after your house because it is unsecured debt. The best they can hope for is a lien if they go that far that expires in 7-10 years so don’t expect to move anytime soon

Perhaps you wouldn’t be in debt if you “didnt have so many classic cars”? I have two huge homes, one in town, one at the lake. Should I keep them and stop paying?!
Debt sucks but its your debt, handle it like a man not a skid. Sorry that all...

where do you get that a house is "unsecured debt", and they can't come after it? If one start's missing mortgage payment's, they darn sure will come after it. Not immediately, but they will.