One of the resounding issues we have found with San Diego homowners who have a need to short sale their home, is that they are not just underwater and in debt with their home. Usually the homeowners are facing extreme financial hardship and have used whatever source they can to survive. Many homeowners in San Diego we work with have cashed out on their 401Ks, IRAs, life insurance plans, and maxed their credit cards. Once fix for the surmounting debt they have on their credit cards is to enroll in a debt settlement program, in which a company is retained to negotiate down the amount of debt on the credit cards.
If a homeowner still have income, they should consider debt consolidation rather than bankruptcy to elimate credit card debt. Say they have $76,000 in debt and are not paying their mortgage or credit card bills. A debt settlement company can negotiate their debt to a fraction of what is owed. There are many predatory lending practices in the credit card world. We know of one individual whose minimum payment went up from 2.5% of the balance to a minimum of 5%. If they did not pay the 5% then their interest rate jumped to 22%. It seem like highway robbery.
A debt consolidation company can negotiate with the creditors to reduce the debt owed. Targets of 50-70% reduction in the amount of debt is acheivable. But buyers beware! Some debt consolidation programs want you to put your money into their trust holding account - thus they put themselves in control. A good debt settlement program will leave you in total control of your money. You can decide how much you can afford to pay each month, and you send the check to the creditor rather than the debt consolidation company.
Comments(1)