Need some advise regarding our financial situation
Date: Sun, 07/10/2011 - 09:25
Me & my wife are having a financial problem. Here's our brief situation:
I have credit cards & line of credit debt about $51K.
As of right now, evertything is current & nothing is behind yet, but I'm in the point where it's getting harder to keep up with them because of my income debt ratio. Both of our credit scores are in low 700 & we are trying hard to maintain that.
I also have a house that the loan is upside down now, bought it @ $400K 4 years ago, and now the market value is only low $200K. I owe Wells Fargo $315K for the 1st Mortgage & $58K with SLS for the 2nd Mortgage. Both are still current & we did a loan modification already (1 year ago). I would love to hang on to our house, but this whole situation makes it harder for us. Our combined income is lot less than before, that's why this debt is pilling up on us. I'm a self employed, working from home & my wife has regular daily job. My business is so slow lately & my wife doesn't make that much either to cover the rest of the expenses.
We live in Bay Area, California. Is the any legit & good non profit local debt relief company that we can go & talk to?
Before we begin, do we have to get "behind on payments" in order to be eligible for debt relief/loan modifications?
Should we do a short sale on the house, or can we try to negotiate with the lender, especially with the 2nd Mortgage (SLS).
Any advise would be appreciated it & we hope to get out of this and not getting deeper.
Thank you.
You can get help from a local debt relief company regarding this
You can get help from a local debt relief company regarding this issue. They may be able to help you out. You can check out the following page to get a list of reliable debt relief companies.
http://www.debtconsolidationcare.com/companies/usa-listing/
The non-profit debt relief companies will charge a nominal fee for their services. So, don't think that you will not have to pay any fee to these companies.
Usually, the creditors/lenders are not much interested to work with the debt relief companies unless you are behind in your payments. I would advise you to explain your financial situation to your lenders/creditors and try to arrange a suitable repayment plan.
Short sale will hurt your credit score. Contact your lender and try to negotiate a repayment plan with the lender.
Thanks for the reply. What's the best time to call my lender to
Thanks for the reply. What's the best time to call my lender to explain my situation, after I'm behind or now (before the grace period ends)?
A friend of mine advised me that we could ditch the 2nd mortgage & do a settlement, because the 2nd has no power, not like the 1st mortgage. is this true?
It kind of depends on what end result you want. If you want to
It kind of depends on what end result you want.
If you want to settle the credit cards and other loans (excluding the house), you'll need to get behind in payments and squirrel away money for a lump sum settlement.
If you just want to lower the payments, you could contact your creditors to see if they offer a hardship plan. Sometimes, they will lower both your interest rate and your payment. They generally require you to close the account as well.
Or you could work with a debt management plan. DMPs will generally try to negotiate lower payments, reduced interest and/or settlements. I personally think it's a waste of money to pay someone else for something you can easily do yourself.
Whichever route you go, your credit score will take a hit.
Thanks OhioGal1. How about the 2nd mortgage, any opinion?
Thanks OhioGal1. How about the 2nd mortgage, any opinion?
Mortgage stuff isn't really in my wheelhouse. However, trying t
Mortgage stuff isn't really in my wheelhouse. However, trying to negotiate with your lender, in my opinion, should always be on the list (near the top) of ideas for trying to work through any financial hardship.