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Mark Cappel
UpdatedMay 28, 2024

My mother is in serious financial debt she really needs a way to get back on track, can you help?

Hello, my mother is in serious financial debt. She owes about $6,000 and is behind on all of her bills right now. Most of it is non-credit debt and she really needs a way to get back on track. Currently she owns a home in Tampa and she rented it out but she still has $300 in mortgage that has to be paid off a month besides the rent that she has to pay where she lives now. Also, she cant sell the home because the terms on the mortgage say that she can re-sell for 2 years. She is a single mother and she still cares for my younger brother and sister. I would help if I could but I don't make enough. I am guessing debt consolidation is not an option here since it's not really credit card debt. Please help. I need some advice for her. Thank you.

Thanks for your question, and there are a few possible solutions. What you are referring to with your mortgage is a "pre-payment" penalty. She could sell or refinance, but she would be charged a sizable fee by her lender if she does this in under 2 years.

Given her debt load, it may make sense to try for either a reverse mortgage or for credit counseling. A reverse mortgage can pay her a portion of the equity in her home each month. I will describe credit counseling below:

Credit Counseling

Credit counseling, or signing up for a debt management plan, is a very common form of online debt consolidation. There are many companies offering online credit counseling, which is essentially a way to make one payment directly to the credit counseling agency, which then distributes that payment to your creditors. Most times, a credit counseling agency will be able to lower your monthly payments by getting interest rate concessions from your lenders or creditors. It is important to understand that in a credit counseling program, you are still repaying 100% of your debts ? but with lower monthly payments. On average, most online credit counseling programs take around five years. While most credit counseling programs do not impact your FICO score, being enrolled in a credit counseling debt management plan DOES show up on your credit report? and, unfortunately, many lenders look at enrollment in credit counseling akin to filing for Chapter 13 Bankruptcy ? or using a third party to re-organize your debts. makes it easy for you to apply, by following this link:

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Dealing with debt

Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q1 2024 was $17.69 trillion. Housing debt totaled $12.82 trillion and non-housing debt was $4.88 trillion.

A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.

Collection and delinquency rates vary by state. For example, in North Dakota, 18% have student loan debt. Of those holding student loan debt, 5% are in default. Auto/retail loan delinquency rate is 3%.

To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.



BBill, Nov, 2009
One way to get started is by thoroughly reviewing your credit report and seeing which creditors or collectors are reporting a balance. Normally, towards the end of the credit report the name of your creditors and contact information, such as addresses or phone numbers should appear. If they do not appear you may want to Google the name of the creditor or collector. Once you have their contact information you may want to try to work something out with them directly to resolve the accounts. Depending on how far behind you are with your accounts you don't have too many options. If you are unable to settle the accounts on your own, and they have been past due for many months you may want to look into a debt settlement company and have them look at your situation to see what they may be able to do. What a debt settlement company does is negotiate on your behalf with your creditors to reduce the amount of debt that you owe. They do charge a fee for the service, which is normally included into the monthly payment. Once you have accumulated enough funds with the program then the settlement company will begin the negotiations. If you decide to work with a debt settlement company make sure you review all the information carefully, and understand everything that it entails.We did a review on one particular settlement company which you may want to take a look at Freedom Debt Relief Customer Review. The other option is to file bankruptcy. This will have a long term negative impact against your credit and will make it difficult to put you back on the right track with your credit.Best,Bill
JJustin, Nov, 2009
I have been behind on my bills for a while and was wondering how do get caught up on all your past debt that is on your credit report even when you do not know who to pay. I have not payed some of these bills for a long time and wanted to start rebuilding my credit history. Could you please advise on how to get back on the right track.