Expert: David - 4/15/2009

Question
QUESTION: Me and a ex husband had a timeshare well he filled bankruptcy on it. Now it is reporting on my credit as a mortgage delinquent payments and fixen to foreclose unless I bring it up 4000.00 before they close it which they don't know when that will be and the total payoff is 11,682.00 So if I pay the 4,000 I can start making payments to pay off the rest but I don't  have 4k and if i try to pay it and get to 3k they close the account I am out 3k and still left with a foreclosure so should I just file bankruptcy on this?

ANSWER: Hi Leslie,

This is a very tough spot to be in.  I never feel good advising someone to consider bankruptcy over small debt...$4000

As far as your credit is concerned the foreclosure is very bad but the bankruptcy will move all your current tradelines to a negative status because you have to declare bankruptcy on all your debts, not just the timeshare.

The things you should know while making your decision are:

1. BK will wipe out the debt but also cost a considerable amount of $$$ as well as ruins your credit.

2. The foreclosure will ruin your credit as well but I can help you recover easier.

3.  There is a possibility that when it is all said and done that the timeshare after foreclosing will settle with you for a lesser amount than what they are now asking.  They will charge off the difference and take the loss as a tax break.

4.  Remember to consider alternative ideas...will they refinance it...can you sell it...can you borrow money from your 401k, insurance policies, family.  Maybe you can pay a portion and someone you know will pay the difference and take over payments for you.(depends on the value and location i guess)

5.  As soon as you can...I can't stress enough...Start repairing the damage.  I can help you with that, call me if you have questions


David McArthur
219-718-8566
www.financialscoringsolutions.com

---------- FOLLOW-UP ----------

QUESTION: How can you heolp me recover from the foreclosure?

Answer
I would hold off on the BK.  You can always file later if you need to.  

As far as credit recovery...the first step is to have negative items removed that are holding your score down.

The second is to arrange existing credit and new credit to maximize your score potential.  The key is to understand how the proprietary FICO credit scoring system works.

Visit www.financialscoringsolutions.com to get started when you're ready.

David