I’m just not sure I buy the advice in this column, much as I want to

We have an old debt that continues to haunt us. Or I should say, that my husband has an old debt from his previous marriage. However, it’s something that he truly feels that is not his debit. He was out of the country for two years, his wife opened an account without his signature, charged an item, and according to the divorce document was responsible for after the divorce.

However, it has continued to be sold, and rereported as new, to various collection agencies. They come around about every 6 months and send us a letter or two (we just got a new one this week offering 50% payment). But it keeps getting renewed on his credit report and despite having disputed it, it remains. We just get a notification from the credit bureaus that it is a valid debt. (It may be valid, but it’s not HIS.)

We’re at a loss as to how to handle it – it’s over 12 years old. On one hand, I’d just like it to go away. On the other hand, we really feel like it’s legally not his debt. I haven’t yet requested validation from any of the collection agencies because I am sure they will just give us the same runaround “it’s valid” that we’ve gotten from the credit bureau.

Anyway, no point to this rambling other than to say that in my experience, I just haven’t found that disputing a debt with a credit bureau does much of anything.

I would do it

I think (but am not positive) that DR says if you can recoup the “refinance” fees (or whatever they happen to be called) in 5 years or less you should do it.

Over 15 years, that $200 a month becomes $36,000. That’s likely enough to pay off the 20% in its entirety and then some.

Thoughts on Mortgage Modifications

So…we’re trying to make a decision that’s a big one. When we got married almost 10 years ago, we were relatively young. As 24 years olds, we were stupid. Majorly stupid. We had plenty of credit card debt that we just kept racking up, but we thought we deserved a house, so we went out to try to see what we could get. So we applied for a mortgage for a small house, and went looking. We found our current home, which was originally listed at $190K, had been reduced, and we were so proud of ourselves for getting it for $135K. We were so proud that we figured any mortgage we could get would be fine, and so much better than “throwing our money away” renting, right? So, my husband signed on the dotted line for cash advance online with instant approval and I had a temp job, so they didn’t want to use my income as consideration, we had a home. Common story, housing values tanked, and at its lowest it was worth around 80K. It’s come back up a bit and is now at around $100K. Problem is..our mortgage. We signed for an 80/20 loan, with the 80% mortgage being at over 7% and the 20% being at over 10%! STUPID!!!! So, we owe way more than our house is worth, have a horrible, awful loan, and it’s not even government backed, so have no ability to re-finance, etc., even though we have never missed or been late on a single payment. We might have been late on everything else, but we never missed that payment.

Husband checked out our options and for the last year, we’ve been seeing what our bank can do for us as a mortgage modification. We have cut our budget like crazy, paid off credit cards years ago, but are having a really hard time making the spreadsheet balance on this monster mortgage payment on a 800 square foot house.

We finally heard back on a mortgage modification on the 80% loan (they’ll only do one at a time, and want the trial period and modification on one loan done before they’ll do the other 20%) We’re just having such a heavy heart over whether to do this. We’re not walking away – we were the stupid, young ones who made the decision (stupid the bank let us, but ultimately, we are responsible for our financial decisions) I have this feeling like the modification is shirking some responsibility in some way — although it also could just be seen like a re-finance — and I’m not even positive whether this is the right financial decision, but there is no way that we’re ever going to get out from this loan the way we’re going — with the amount of interest we pay, we never may any headway to try to get any equity in this house.
The modification could tank my husband’s credit (but not mine — my name is on the title only, not the mortgage) – during the trial period, it would be listed as paid as agreed, and after, would be listed as a modified mortgage. But, since we’re not planning on applying for more credit anytime soon, the only thing that would affect is our house/auto insurance.

I should mention we are nowhere near out of baby step 2 yet — my husband has astronomical student loan bills — which is a majority of the reason we can’t get on our feet. We need to have more money available for the snowball, especially after I didn’t receive my normal yearly bonus (I was hoping that would get things rolling again!)

So, thanks for reading — the mortgage modification would reduce our monthly payment on the 7% loan down by $200. That $200 would “go back into” the loan during the trial period, but the loan interest rate in the long term would be reduced to 5%. Even if it technically would reduce the length of our loan, we could probably afford to put $100 back into the principal monthly if needed (or more likely, use for our snowball). We’re about $100 short on our other bills each month, so this would do that. We have our baby step 1, but it seems like every time we get it back up, murphy hits.