Lower monthly payments on your debt
Credit cards are drastically past due. Don't want to file bankruptcy, got any other solution before I loose it?
i live on social security, my monthly debt has exceeded my monthly income and my credit score is steadily dropping because i can't get caught up. I have a $63,000 mortgage because of refinancing at 9.95%, but I can't refi now because my credit is messed up, mortgage has always been current because i need a place to live, but credit cards are drastically past due. Don't want to file bankrupcy, got any other solution before i loose it!
Thank you for your question. First, I want to assure you that you are not alone in this predicament; many consumers find themselves buried in debt and struggle to 'unlock' the equity in their homes.
Thankfully, I can think of several possible solutions to your problem, but which option is the best for you will depend on how the debts, your home's value, and how much money you can afford to allocate to your debts on a monthly basis. If you follow the links below, I can put you in contact with a company that may be able to assist you in resolving these debts.
Very quickly, if you want a free debt consultation with one of Bill's approved debt help partners, click here: http://www.bills.com/debthelp/debt/
Now... on to your options:
Since you own a home, a secured debt consolidation loan may be right for you. This type of loan is essentially a home equity loan which is used to pay off your other creditors. Secured consolidation loans help many consumers by consolidating all of their debts into a single monthly payment with a lower interest rate and payment amount. The big considerations for getting 'approved' for a refinance loan (typically called a mortgage refi) are Loan to Value (typically rule of thumb is that 80% is reasonable), Debt to Income (typically anything above 50% is very high, and anything below about 30% is good) and lastly credit rating (a FICO score is an indication of your credit worthiness and ranges from 300 on the low end to 850 at the top).
However, be careful before you borrow money against your home to pay off credit cards and other unsecured loans; you will be converting what was previously unsecured debt into secured debt. This could cause you problems down the road if for some reason you are unable to make your payments, or if life circumstances force you to file bankruptcy, as you may not be able to discharge the secured debt as you would unsecured debt. However, secured debt consolidation loans work for many people, so this is an option to consider carefully?the Bills.com Savings Center is a great resource to help you find a lender for this type of loan.
If you want to see if this loan can be done, Bills.com makes it easy to compare mortgage offers and different loan types. Please visit the loan page and find a loan that meets your needs at: http://www.bills.com/mortage/refinance/
The first recommendation I make to anyone obtaining a mortgage refinance or purchase loan, such as your contemplated refinance loan, is to shop around with several different lenders to find the best deal available. Keep in mind that certain types of mortgages use a teaser rate, usually charged for the first two to five years of the loan, to put borrowers in homes they may not be able to afford. In order to analyze what your mortgage will truly cost, you need to analyze what your interest rate will be once your initial rate expires.
The only way to determine whether or not you will qualify for a refinance loan is to apply for a loan with several different lenders and/or brokers. Not only will these mortgage professionals be able to tell you whether or not your currently qualify, but if you do not qualify, they can tell you what aspects of your credit history you need to improve before obtaining a loan. If cannot find a lender willing to extend you credit, you should work on improving your credit score and reapply when your score has improved sufficiently. When you talk to a lender, he can tell you the minimum score required, giving you a goal to work toward.
If you cannot get your mortgage refi approved, you have two other debt resolution services to consider:
Another option to consider is a Consumer Credit Counseling Service, or CCCS. CCCS companies offer numerous services, such as financial counseling and budget planning, as well as Debt Management Plans (DMPs). In a DMP, the CCCS would arrange a new payment amount with each of your creditors, usually based on a reduced interest rate. You would then make a single monthly payment to the CCCS which would distribute the funds to your creditors, based on the new payment amounts. There are several drawbacks to CCCS, though. First, depending on your creditors, it may not be able to reduce your monthly payments enough to improve your financial situation. Second, it may have a negative impact on your ability to obtain a loan, so you may not wish to enter into a DMP if you anticipate any large purchases, such as home or an auto, in the near future. Third, the average DMP takes around five years to pay off your debts, so you must be willing and able to commit to a long-term repayment plan.
You may also want to consider the services offered by debt settlement firms. Debt settlement, also called debt negotiation, is a form of online debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs typically run for two to three years. It is important to keep in mind, however, that during the life of your debt settlement program, you are NOT paying your creditors. This means that a debt settlement solution of online debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. However, debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Chapter 7 Bankruptcy. The trade-off here is a negative credit rating versus saving money. Once you repay your debts, you should be able to rebuild your credit score through careful management of your credit accounts.
Hopefully, one of the several options I have described above may be able to help you. I encourage you to explore the Bills.com website, http://www.bills.com/debthelp/ to read more about these and other options available to you.
I hope this information helps you Find. Learn. Save.