Beth Asks...

Q: My 81 year old father has a corporation with several business including 2 restaurants and a garment factory. He is in debt well over $300,000. His debt includes liens on properties, corporate taxes, property taxes, factory costs, credit card, mortgages etc. The businesses are not earning enough money to ever pay off the debt. In addition, he has personal debt, a lien on his home of $47,000. The value of his properties is over $350,000. My brother and I have been encouraging him for years to sell an asset to pay some of the debt but he denies there is a problem and refuses to sell anything (maybe due to pride or love of his businesses). The IRS has already publicly listed some of the debt. I have tried to brainstorm ways to help him out but I do not wish to jeopardize my own finances. I have already given him all the cash I could afford. I lose many nights of sleep over this. Any suggestions?

A: Whatever you do, don't give him one more dime. Your loving but enabling help only helps him to linger longer in this mess.

We all reserve the right to do dumb things in life and for whatever reason he insists on sticking his head in the sand and not deal with this.

I think you and your brother should think about giving him a big hug and let him deal with the mess he created. The obvious warning signs are there like liens on property, IRS attention, lingering debt, etc.

Just remember that the first stage of debt is denial. Sounds like your father just got stuck in that stage for a long time.

Tim Asks...

Q: How do I know when derogatory information will be dropped from my credit report? I know that they can remain for seven years from the first late payment but credit reports do not show this information. They only show when the account was opened and date of last activity. Also, if an account was transferred to a collection agency does the seven years start over from when the collection agency took over? Thanks for your help.

A: The clock is actually seven years and six months from the time first reported. Most bureaus drop it earlier. Sounds like you need to get a consolidated credit report to get the really detailed information. Get one here. The clock does not start over if it is transferred to a collection agency.

Shawana Asks...

Q: I recently read an article in my local paper about paying off a mortgage early by paying every 2 weeks. I have a 30yr mortgage and have been solicited for some systems like you mentioned for a fee. My question is: My loan is through Washington Mutual bank. About 140k @5.375%. Are there some lenders who will not allow a person to pay every 2 weeks without setting up something and a cost involved? Could I just make an extra full payment sometime in the year? What effect would that have rather than paying every 2 weeks? I really like your article.

A: My suggestion, don't get fancy, just take one monthly payment and divide it by twelve and send that as an extra payment each month with your regular mortgage payment. For example if your regular mortgage payment is $1,200 a month then send $100 extra each month with the regular mortgage payment. That amount should be credited as pre-paid principal. If you send a check be sure to write on the memo line that the extra amount if toward principal. Once in a blue moon a mortgage company will apply it toward pre-paid interest unless you tell them.

Cheri Asks...

Q: Here it is: I bring home approx. $637.00 every 2wks. 1st mortgage went up and is now 500.98 month. 2nd mortgage is 236.85 but I pay 240.00 a month. Tried to refinance 2nd in with first through HFC but they said it would only appraise at 68,000. not enough to do it, I have a ciitibank credit card I owe 16.4% bal=9,048.04(194.00mth)(daughter pays till car bal is pd off), Bank of America 11.49% bal 6,404.74((73.82), Bank One 7,711.82(boyfriend pays he uses)(154.00mth),Car ins=108.(66.00daughter42.00me)Electric=approx 48.00,Gas heat=budget90.00mth, cable=49.00mth,cell(contract doesn't end till dec)49.00,water/sewer50.00 month, phone=43.00mth, hospital=20.00mth, internet9.95mth. I also have a truck payment which my boyfriend drives and pays for but he didn't have credit and when all said and done it ended up in my name first (had better credit than him and they used me to get a better interest rate)but he pays for it. I have a son whose car I cosigned for that he pays for also which is in my name.

Do you have any advice for me I lost all my overtime and on straight 40hrs a week and I work 8am-4:30pm m-f and tried to get a second job but with those hours its hard nobody wants to hire me. I have to drive 45 min to work and 45min back so it makes it hard to get to another job when they need me.(also looked for another job that has overtime but nobody wants to pay you anything decent). I have been pondering Bankruptcy but I don't really want to go that route until I absolute must, After paying all my bills I don't have any left over for food for me and my daughter so that's where the credit cards come in and I'm just getting buried further and further. Help me if you can please any advice would do Thank You for your time and patience. I don't really want to file bankruptcy!!! But will if I have too subject I also forgot to mention that my 1st mort. payment bal= 51.000.00 2nd mtg. bal=19,700.00, and the credit cared balances on some I paid for improvements in my home, I bought it at 51,900.00. I had a mortgage broker help me in 2000 and he refinanced it with the one I have now that is why I have a second mortgage. My house had nothing when I bought it in 98 I put on siding, new furnace in October last year, new carpeting through house new kitchen floor tile, ceiling fans, new light fixtures throughout house new water tank, new water lines, and it didn't come with appliances I had to buy them myself.

Q: So this is a classic example of why money problems are not about the money. Cheri's situation is like one of those entertaining kids pictures where you are supposed to find all the things that don't belong. By the way, I still can't see those 3D pictures.

Cheri, you know there are a lot of people out here that feel your pain, love you and would give you a big hug. And what I'm about to tell you is said out of love, not pain or anger.

Darlin, you are killing me here. You are on the hook for way too much stuff here. Much of it was based on your previous wages and overtime is not a guaranteed item.

Here are two things I know for certain. If you are using the credit cards, essentially taking out a loan, to pay for things you can't afford or reasonably expect to repay, you are stealing. I realize that it can be rationalized that you need to make up for loose ends but the real problem here is that your life exceeds your income. Now that overtime has been cut and with all of the other limiting factors to help you increase income, you've either got to look for a new higher paying job or cut your expenses.

If they are not doing it already I'd get the adult children living at home and the boyfriend to kick in month for the food and mortgage payments. You do not need to let everyone draw you dry here. I realize that the woman is the rock of the family, that's what my wife always tells me, but enough is enough.

I know you don't want to file bankruptcy but I think you should go talk to a bankruptcy attorney in your state and get better informed about the protections it can give you. After your visit with the attorney you might decide that you don't want to file bankruptcy but at least you'll be able to make an informed decision rather than one based on how you think you might feel.

Here is my big vitrual hug and flowers for you.