On $14,000 in debt owed to Beneficial, I would have guessed that your monthly payment would have been very close to $350 - so that sounds right. But, if you had paid on time every month and never missed a payment then that means that you have already paid them almost $17,000. I don't know what your interest rate is, but I cannot imagine how you still owe $11,000 -- it is very unfortunate that many people just like you continue to struggle under the weight of debt that just seems like it won't go away.
Since you are stuggling, I would suggest evaluating your debt consolidation options.
I answered a question similar to yours in my blog recently. Please go to the following link to read my answer to a fellow reader: http://www.bills.com/30000-debt-consolidation-and-looking-to-consolidate-my-bills/
I will also try to give you a quick overview of your options. I can tell you, quickly, that they cannot take your house, so do not let this financial stress turn into emotional or personal stress.
Now on to your options, which are many when struggling with debts. When considering the different options, I encourage you to make sure you fully understand each option before you decide which to choose. Furthermore, before considering the alternatives you may want to contact the original creditor and ask if they would be willing to work something out with you to bring the account to a good standing. If this option does not work then you should consider the following credit debt consolidation options.
Credit counseling, or signing up for a debt management plan, is a very common form of online credit debt consolidation. There are many companies offering online credit debt consolidation counseling, which is essentially a way to make one payment directly to the credit debt consolidation counseling agency, which then distributes that payment to your creditors. Most times, a credit debt consolidation 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 debt consolidation counseling program, you are still repaying 100% of your debts -- but with lower monthly payments.
On average, most online credit debt consolidation counseling programs take around five years. While most credit debt consolidation counseling programs do not impact your FICO score, being enrolled in a credit debt consolidation counseling debt management plan does show up on your credit report, and, unfortunately, many lenders look at enrollment in credit debt consolidation counseling akin to filing for Chapter 13 Bankruptcy -- or using a third party to re-organize your debts.
Debt settlement, also called credit debt consolidation negotiation, is a form of online credit debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Credit debt consolidation settlement programs typically run around three years. It is important to keep in mind, however, that during the life of your credit debt consolidation settlement program, you are not paying your creditors. This means that a credit debt consolidation settlement solution of online credit debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your credit debt consolidation settlement program. You could also face aggressive collection efforts, and even a lawsuit.
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. For people with significant amounts of debt, this is frequently worth investigating -- especially if you have bad credit and struggle with the payments.
Many people think first of a debt consolidation loan when seeking debt consolidation. This option typically means a second home loan (or home equity line of credit) or refinancing your primary mortgage. In a credit debt consolidation loan, you exchange one loan for another. The most frequent form is taking out a mortgage loan, which carries a lower interest rate and is tax deductible, to pay off high interest rate credit card debt.
It is important to be aware that shifting unsecured debt to secured debt can create a volatile situation, if there is ever a chance that you cannot afford the new mortgage payment you are now putting yourself at risk of foreclosure! In the case of a debt consolidation loan, most mortgages are 30-year loan, which means that the total cost and the time to debt freedom could be very high, but the monthly payment will be lower than other credit debt consolidation options and there is no credit rating impact. Also, in this economic world and tight credit standards, your decreased income due to layoff may make this option impossible.
Bankruptcy may also solve your debt problems. A Chapter 7 bankruptcy is a traditional liquidation of assets and liabilities, and is usually considered a last resort. Since bankruptcy reform went into effect, it is much harder to file for bankruptcy. If you are considering bankruptcy, I encourage you to consult with a qualified bankruptcy attorney in your area.
If you are considering default or are already behind on your bills, I will give you this link and additional information:
You may be curious what may happen if you do nothing. If you stop paying your unsecured debts, creditors have the right to collect the debt. First, you will likely receive collection calls and letters from the creditor directly. If you are still unable to pay the debt after several months, the creditor is likely to refer the account to a third-party collection agency.
Third-party collectors are known to be much more aggressive in their collection tactics than original creditors, so do not be surprised if the calls become more persistent, or even threatening. Thankfully, the Fair Debt Collections Practices Act has rules governing the behavior of collection agents. However, unscrupulous debt collection agents do not follow these rules.
In some cases, when all other collection efforts fail, a creditor will decide to file a lawsuit against the debtor. This is not a frequent occurrence, but it is within a creditor's rights and a possibility about which you should be aware. If one of your creditors sues you, the court will likely issue a judgment in the creditor’s favor. Depending on your state's laws regarding the enforcement of judgments, the creditor may be able to garnish your wages, levy your bank accounts, place a lien on your property, or take other action to enforce its judgment. BUT - they cannot just take your home.
Regarding a credit report, default damages a credit score severely. In addition, default is a warning flag for many lenders, who will refuse to deal with a potential customer with a default on their record. As a result doing nothing and allowing default is a poor option for most consumers.
Although there are many forms of debt consolidation, many people with good to perfect credit who own homes should look into debt consolidation loans, while consumers with high credit card debt and poor credit may want to explore debt settlement or negotiation. However, each consumer is different, so find the debt consolidation option that fits for you.
Lastly, here are some fast tips for your own quick Credit Debt Consolidation Evaluator:
1. If you have perfect credit and have equity in your home -- consider a Mortgage Refinance.
2. If you can afford a healthy monthly payment (about 3 percent of your total debt each month) and you want to protect yourself from collection and from going delinquent -- consider Credit Debt Consolidation Counseling.
3. If you want the lowest monthly payment and want to get debt free for a low cost and short amount of time, AND you are willing to deal with adverse credit impacts and collections -- then evaluate Credit Debt Consolidation Settlement.
4. If you cannot afford anything in a monthly payment (less than 1.5 percent of your total debt each month) -- consider Bankruptcy to see if Chapter 7 might be right for you.
Bills.com makes it easy for you to apply for debt relief.
I hope this information helps you Find. Learn & Save.