With a debt settlement program, consumers negotiate with their creditors to settle what is outstanding for less than the full amount. If everything goes as planned, they are expected to make a single affordable payment to the consolidator every month until the debt is fully discharged.
Qualifying for a debt consolidation loan:
In this type of debt solution, individuals with significant credit card debt save money when the amount they owe is reduced, and they save on interest charges as well. In addition, they can accomplish all of this without refinancing their mortgage or taking out a home equity loan. In fact, many homeowners are unaware that qualifying for debt consolidation is mainly based on the amount they owe and the laws of the state where they live. The applicant’s credit history is usually not a significant factor, and home ownership is not required for participating in the program.
What homeowners should know:
A number of homeowners who want to consolidate their debts feel that they should use a home-equity loan or refinance their mortgage to accomplish this. Before proceeding any further, they must face the fact that foreclosure is a possibility if they fail to make the monthly payments on their consolidation loan.
If you are approved for a debt consolidation loan because you refinance your mortgage, you may not be able discharge that debt if it ever becomes necessary for you to file for bankruptcy. This is what you will have to deal with because your unsecured debt was converted into secured debt when you used the loan to take care of paying off your credit cards.
Unforeseen consequences you may face:
In addition, other options, such as credit counseling and debt settlement, will be unavailable in your situation. In another scenario in which you have not used your home as collateral for a debt consolidation loan, if your income decreased dramatically and you still owed a sizable balance on your credit cards, debt settlement, credit counseling and bankruptcy would still be viable alternatives. They would enable you to protect your home and pay off your debt at the same time.
Successful debt consolidation:
In general, this kind of program teaches consumers how to control their spending by requiring them to stop using their credit cards, close the accounts and make their purchases on a cash basis. They also learn how to follow a budget and avoid overspending entirely.
Las Cruces real estate expert Chris Harrison is not only a dedicate Realtor in the Dona Ana County area of New Mexico, he provides commercial representation, land and vacant property advice and results when it comes to selling on time. Chris Harrison is an expert not just at residential but Las Cruces commercial real estate as well. Proficient in real estate trends, laws and changes, Chris can help guide you through your next purchase or sale efficiently and on time.
