Obtaining Mortgage Relief With Consumer Debt Management
Unfortunately, once the bank starts foreclosure proceedings, it is not likely that anything will stop them. At the same time, it is important to understand that certain consumer debt management solutions can make it impossible for you to avoid foreclosure. In particular, you will need to be wary of any solution that seeks to consolidate your debt into an existing mortgage, or create a new one for that purpose.
Consider a situation where you are seeking relief from a number of different debt types. As an example, you may have a mortgage on your home, as well as credit card debt, a car loan, and student loans. In this case, many consumer debt management advisors will recommend consolidating your debt in order to reduce interest.
Typically, the interest “reduction” occurs because you are switching from unsecured debt to secured debt. At the same time, when you consolidate, you will also be given a longer amount of time to pay back the loan. As you may be aware, the interest accrued over this period of time is likely to be double, perhaps even triple what you would have paid by not consolidating.
Therefore, as a consumer, you need to think carefully about the solutions available. If you still have good credit, you may want to see if you can consolidate your debt, but not use your home as collateral. As an example, you may decide to purchase a boat or a second car. In some cases, this may give you enough equity to secure a debt consolidation loan. As may be expected, if you suffer a job loss or other catastrophe, at least you will be able to pool your resources into your home mortgage.
Without a question, if you need consumer debt management assistance, you will need to do all that you can to protect your home. Rather than simply go along with plans that will prevent you from choosing which debts to pay in a crisis, you will need to make sure that you can at least pay your mortgage plus daily living expenses. Among other things, you would be better ensuring that you have a sideline income in place that will cover these costs.
As you may be aware, if you are eligible for unemployment, you will receive, at most 1/3 of your base pay. Therefore, when doing your budgeting, it is important to make sure that your mortgage plus daily expenses do not exceed this amount. At the very least, this will enable you to protect your most valuable asset. This number is also ideal to work with in terms of achieving a secondary source of income.
Today, consumer debt management solutions do not leave you much room to prepare for a crisis. In many cases, you will find that they will prevent you from negotiating with existing lenders, as well as make it impossible to avoid a foreclosure on your home. That said, if you study your options carefully, you can find better solutions that will make it possible to save your home as well as other assets. |
