Expert: - 2/10/2004

Question
I own a condo that is worth about $225,000 on which I owe $70,000.  My monthly payments are $600 = $300 interest and $300 principal, plus $200 condo fee.  I own a parking space for which I receive $150/month for which I paid cash and owe nothing.  I owe $28,000 on 5 credit cards and they are at their limits.  I am a self-employed computer programmer and made $100,000 per year prior to a year ago.  I haven't worked in 1 year and have exhausted my unemployment benefits (which I got because some of my work was on a W-2) and have only enough money for 1 or 2 months left.  I expect to find work sometime.  How can I translate my assets into money in the short term in order to survive?  Can I do it based on what I own without regard to my lack of income or my credit card debt?

Answer
Charlie,

I have a lot of questions to ask you,

1- have you considered selling the condo? you have a lot of equity in it that would help you get throug quite some time without income
2-do you have family or friends who you could stay with? I know that without income it will be hard to rent a place but with your equity could probably rent an apt for a whole year without worrying about rent if you sell the condo.

3- how about renting the condo? it is much easier to rent a condo than a house, and maybe you can stay with family or friends.

4- have you considred refinancing? adding a 2nd mortgage? which I really think is dangerous if you now transfer unsecured debt to secured debt, you could lose your condo eventually, and many people end up reloading their credit cards.  I would  only recommend refinance if you will do it to reduce your payment, even though your payment of $600 I understand is not very large. What interest rate do you have on the mortgage?

I really think selling may be your best option, but I don't really know what your feelings are about that.

I understand you are worried about your credit card debt, it is a sizable amount. For now the first thing is to cover you basic necessities and housing, and restoring your income, even if it is at a much lower level.  Nobody goes to jail because they owe unsecured debt, but they could eventually put a lien on your condo since you have a lot of equity. That would be another incentive to sell quicker now that you need the cash. Depending what state you are in, a lien on your condo only means they will collect the amount you owe them when you sell the place. Please check with an attorney about this. I also recommend prepaid legal as a way to save on attorneys fees. www.prepaidlegal.com

I would like to help you figure out your monthly budget if you don't already have one.  my email address is irma@stopyourdebt.net if you'd like to contact me directly.

I hope this was helpful, let me know if you can answer my questions,
Irma
www.StopYourDebt.net