Considering my options.
Date: Mon, 04/26/2010 - 20:33
I am torn. I have people telling me that I should let my debt go and attempt a settlement but I am not in a so completely dire situation that I "need" to. I also am battling my own conscience in the matter.
If you would give me your perspective I think it would help a lot. Here is a quick run down
my wife got pregnant with our third child about two years ago. At that time we were almost completely debt free after just moving into a new house save for the mortgage and about 3k on CC. About 6 months in she left her full time job dropping our income below our monthly bills. Over the next two and a half years our debt climbed to 30k in CC 75k 1st mortgage and a 25k second mortgage(House dropped from a value of 130k to 49k) due to loss of income and some admittedly bad financial decisions.
Now my wife is working part time again and we are able to make a hundred or two more then our minimum payments so all is not lost but it will still take 5-8 years to pay down our cards and 2nd mortgage at this rate(considering no major changes happen since neither her or I have medical.)
I sold a vehicle and have 6500.00 in a savings account that is going towards the debt regardless of the way I handle the debt.
I have a couple friends that are telling me that I should just stop paying my cards. Put all the extra money into a savings account and await settlement in an attempt to clear all my credit card debt in much less then a year(which will make paying my mortgages much easier.) Neither of the people suggesting this have much experience. One has filed chapter 7 I believe but never a settlement. My "moral" sense and common sense tell me that if I try it since I am "making money" they will just try to do wage garnishment and I will destroy my credit in the attempt. I don't plan on buying a house in the new few years but so credit rating is not the end of my world but on the other hand as it is it's going to take at least 5 years before I could even consider any major purchase with the debt I have.
Is there anything that could be suggested for mortgage relief? Each mortgage is with a different bank but the appraised value of the house is less then 50% of what I own.
I am pretty confused and bewildered. Any input from people familiar with these stories would help tremendously.
Thanks in advance,
Nicholas
I did not mention to whom the numbers are owed. Chase CC 19k
I did not mention to whom the numbers are owed.
Chase CC 19k
Chase Mort 25k
BOA CC 2.7k
BOA Mort 75k
GM CC 6k
My personal opinion, and remember this is just a personal opinio
My personal opinion, and remember this is just a personal opinion, is that settlement is done only as an alternative to bankruptcy. I don't believe in stategic default only to get out of debt quicker if you have the ability to pay them off. I never would have gone through the headaches of the phone calls and the trashed credit score just to get out of debt sooner.
If you still have sufficient income, I would suggest checking out Dave Ramsey's stuff. Fantastic and may give you ideas on how to get out of debt sooner than you thought.
hi NicholasH after reading your post it seems that you had come
hi NicholasH
after reading your post it seems that you had come into some real difficult times there however as per my suggestion and thats just my personal opinion i think that you should consider a debt settlement simply because you can get rid of these debts and start actually capitalizing more of your pay check for your own use instead of paying it up to your creditors in finance charges (my indication is towards the credit cards not the mortgage) by doing this the money that you would be saving each month (that would go to the credit cards)could now be used to put towards the mortgage so at a whole you will be better off if you do a debt settlement.
with regards to your credit score that is some thing that can be rebuilt with time but the money that you are losing each month to these creditors that cannot be got back more over if you save some money on your bills each month by doing settlements and use this money to pay of the mortgage it would automatically mean that you are paying more than the monthly payment required and that payment could have a positive impact on you creditor scores so if one side you are losing points on your credit by being late on your payments with credit cards on the other side you will be gaining scores by being on time with your mortgage and paying more than the minimum payment its your call.
Nicholas, you may want to pursue a mortgage modification if you
Nicholas, you may want to pursue a mortgage modification if you haven't already. Contact BOA and peruse www.loansafe.org for what others have been through in getting mortgage modifications through the HAMP program. Get your mortgage payment reduced to 31% of your income, and work with the credit card companies from there.
Consider visiting with a non-profit credit counselor who can assess your situation and perhaps work with your creditors (avoid the 'for profit' internet scammers like the DS financial spammers on this board).
Your credit card companies don't have much of a conscious - there goal is to make money on you. If they took a bad risk on you and lose money - it was a poor decision on their part (and they deal with the consequences just like any other business). This is "unsecured" debt. Try to work with them to reduce your interest rate or put you on a hardship plan. Often, they are unwilling to do this (or get to the settlement process) unless you start getting behind.
Guestgeo has offered you good advice regarding the mortgages.
Guestgeo has offered you good advice regarding the mortgages.
In regard to the credit cards, are you still making your payments on time? If so, I would call them and ask them to reduce your interst rate. There are many times that option is available to you and can help you pay off your debts much more quickly.
Another option might be to transfer some of that CC debt to a 0% card, if you qualify for one, and take your savings money and pay them off at 0%. That can make a huge dent in the amount of money going out monthly.
Combine one or both of those items with a mortgage mod and you might just be able to pay off those cards in a year without hurting your credit...and actually improve it!
Everyone has an opinion and it's up to you to sort through them!
Everyone has an opinion and it's up to you to sort through them!
This is a great place to gain information and formulate your own plan.
Some of the cc's will let you pay off at a reduced rate.
Others could care less.
You prime objectives per Dave Ramsey are food, shelter, utilities and a beater car.
My journey began last November when I decided that enough was enough.
Paid on time and my interest rates were going up.
The cc's had made tons of money from my stupidity.
Yes, it was a strategic default on all of them.
That way the cc's could see that through my credit report.
I got myself into this mess.
With the help and advice in this great website, I got my self out of this mess.
My path was debt settlement.
Got it done in about 5 months.
30% on 87k.
I have sworn off credit and pay via debit cards only.
In conclusion, read, read, read these forums.
Ask questions.
Good luck.
Thanks to everyone for your information and help. Of course any
Thanks to everyone for your information and help. Of course anyone who still has some input to offer is still very welcome. I will check into HAMP and the possibility to somehow lowering my mortgage. If I could somehow get my mortgages combined I could cut my monthly payment down by up to $500.00 but since the value of the house dropped so much it's unlikely I will be able to do that. I will keep searching options there. I was not familiar with David Ramsey so I will start reading there too. "King Jabba Labba says above: "Paid on time and my interest rates were going up." This is another thing that pushed me to consider debt settlement. So far GM card has not pulled this but for the last 4 payments on my BOA they have lowered my credit limit to just above what I owe and increased my APR from 17 to 23 to 27 to 29%. I just got notice in the bank yesterday that Chase just increased my APR from 16.9 to 22%. I have never been late on either of these cards but as guestgeo said: "Your credit card companies don't have much of a conscious - there goal is to make money on you." It's something I have always known and I am getting to see it in full force now(which pushes me further towards debt settlement with the "since you did it to me I will do it to you" emotional approach.) As it's said in marketing the customer has made their purchase decision in the first 20 seconds of introduction and if I am being completely honest with myself I would say that my decision ???is??? made towards debt settlement, yet comparing a general purchase to the magnitude of debt settlement is very different and I am forcing myself to examine and learn the options completely before I let myself blindly decide on any action. Now it's time to read read read and then read some more and eventually decide and plan out my maneuvers. Thanks again to everyone who has posted and to anyone who will post! Nicholas
Sorry for the double post but it ate my formatting!
Thanks to everyone for your information and help.
Of course anyone who still has some input to offer is still very welcome.
I will check into HAMP and the possibility to somehow lowering my mortgage. If I could somehow get my mortgages combined I could cut my monthly payment down by up to $500.00 but since the value of the house dropped so much it's unlikely I will be able to do that. I will keep searching options there.
I was not familiar with David Ramsey so I will start reading there too.
"King Jabba Labba says above: "Paid on time and my interest rates were going up." This is another thing that pushed me to consider debt settlement. So far GM card has not pulled this but for the last 4 payments on my BOA they have lowered my credit limit to just above what I owe and increased my APR from 17 to 23 to 27 to 29%. I just got notice in the bank yesterday that Chase just increased my APR from 16.9 to 22%.
I have never been late on either of these cards but as guestgeo said: "Your credit card companies don't have much of a conscious - there goal is to make money on you." It's something I have always known and I am getting to see it in full force now(which pushes me further towards debt settlement with the "since you did it to me I will do it to you" emotional approach.)
As it's said in marketing the customer has made their purchase decision in the first 20 seconds of introduction and if I am being completely honest with myself I would say that my decision ???is??? made towards debt settlement, yet comparing a general purchase to the magnitude of debt settlement is very different and I am forcing myself to examine and learn the options completely before I let myself blindly decide on any action.
Now it's time to read read read and then read some more and eventually decide and plan out my maneuvers.
Thanks again to everyone who has posted and to anyone who will post!
Nicholas