Could someone please suggest an alternative...
Date: Sat, 11/28/2009 - 16:59
My wife and I have $28,000 dollars in unsecured debt (credit cards). We have a mortgage with $282,000 remaining on it, and no other debt. Our home recently (within the past month) evaluated for $305,000.
Our credit score is good (each averaging around 700 when you average the three main firms (forgot their names)). We are never late on our mortgage or credit card payments, and we always pay a bit above the minimum payment (just so we can say that we do not pay the minimum). We are no where close to collections or have ever gone to collections for anything.
After we budgeted, we barely break even each month after paying our bills. While we could probably tread water for a few more years, I do not want to do that. There has to be some way to take our combined minimum payments (about 650 per month) and put that towards some solution to putting down the debt rather than just to keep treading water paying the minimums.
I tried to refinance my current mortgage and add on the additional $28,000 dollars of unsecured debt to the new mortgage amount, but I was told that the new amount the mortgage would be would not meet a certain percentage to what the home estimated at. So, refinancing my mortgage was not the solution.
I also tried to get a home equity loan, but the percentage needed between the amount borrowed and the equity in my home again did not meet the percentage for an approval. In other words, my home dropped so much in value since the beginning of the housing crisis that I no longer have enough equity in my home to borrow $28,000.
So now the only other avenue (outside of bankruptcy which I really do not feel is an option for us) is to hire a debt settlement attorney and see if we can cut the $28,000 dollars in unsecured debt in half. I have been looking at a firm called Hoffman Brinker which has a good rating with the BBB. I think the drawback with them is that while they could probably cut my debt in half, I would need to pay the remaining half ($14,000) up front right away (no monthly installment plan). This is possible if I sell my car, use my tax refund, and take out a loan for the remaining amount. This would hurt my credit score (which I am fine with if it eliminates my credit cards) and leave me with about a $7,000 loan to repay over 5 / 10 years. Again, something I would much rather prefer than to being a slave to the credit cards.
[SIZE=3]Besides this option, is there any thing else I should be looking at first which I may qualify for? [/SIZE]
Thanks,
Michael
Keep checking back for replies, members are usually pretty busy
Keep checking back for replies, members are usually pretty busy on the weekends.
Not to minimize your challenges in any way, but for 2 people wor
Not to minimize your challenges in any way, but for 2 people working, 28,000 is a relatively small amount of debt. By very very careful budgeting, and cutting absolutely everything out of our spending, and selling everything I could get away with selling (books, dvds, board games, clothes, unnecessary household items, etc) I have been able to put significant amounts toward our debt. (Our debt is significantly higher than yours.) I honestly believe that for that amount, I wouldn't jeopardize my credit by debt settlement. Keep in mind that if you have assets, such as equity in your house that is worth more than your discounts on your debt, you will have to pay income taxes on the written off amount. I think I would be willing to take on a second (or third) job and freeze all extras like cable tv, land line phones, whatever you can. You will be very surprised how fast your $28,000 will diminish AND keep your credit score intact.
Again, I don't know your personal situation, but you may want to consider these things and see what you can come up with on your own. Good luck!!
