How to Survive Rising Credit Card and Mortgage Payments

We have been fortunate to see the real estate market growing, and many people buying homes. That has happened even though prices were escalating. The question is, how?

Lenders have been very successful in getting more people into homes with creative financing, such as 100% financing and adjustable rate loans with low initial interest rates. With banks paying loan officers handsome commissions for making these loans, many loan officers sold them with messages like: "Why put anything down when you can use those funds for other things, like upgrading the house?" or "Buy now and when the interest rate goes up, you will have plenty of equity to refinance at a lower fixed rate."

Consumers were flocking to these loans to obtain their share of the American Dream. But all of that comes with a price.

As an executive with a debt settlement firm, I have seen thousands of people get into these types of loans with the confident expectation that the market will go up even higher. That is a dangerous game. Many have gambled and are ahead, but what about those on the edge - the ones that are still holding thousand of dollars in credit card debt?

Often, those consumers found that things did not go as planned. Perhaps it was a lay-off at work, an illness, an additional child, or even divorce.

If you find yourself with credit card debt and a mortgage payment that are together too high, you are no doubt looking for a solution that will allow you to keep your home while avoiding bankruptcy. If so, debt settlement may be the solution you are looking for.

"Debt settlement" or "debt negotiation" has been around for decades. Banks do not publicize this option because they want consumers to pay in full. But some consumers cannot, and do not want, to file for bankruptcy protection. For these consumers, debt settlement works, and often works well. It can work especially well for someone who has equity in their home they can use to pay off their credit card debt at a significant discount.

Let's say John and Mary have $50,000 in consumer debt. They have $30,000 in equity in their home. Even if they could refinance up to 100% of the value of their home, it would not be enough to pay off the credit cards and they would still be unable to afford both a mortgage payment and the credit card payments.

In this case, debt settlement can help. John and Mary can use the $30,000 in equity as a lump sum to settle their credit card debts at a discount, and probably in a relatively short period of time. Provided they don't take on new unsecured debt, their mortgage payment will then be more affordable because they don't also have to juggle credit card bills. Taking advantage of the good interest rates on mortgages that are still available is critical.

While debt settlement can also work for consumers who don't have home equity, it will likely take longer as they save up to settle the debts. Tapping home equity to settle debts can work well for any homeowner with a legitimate hardship and significant unsecured consumer debt. A reputable debt settlement company will settle the debt with the creditors at a significant discount, allowing consumers to get back on their feet. Look for a debt settlement firm that will not charge all their fees until the job is completed successfully. Otherwise there is no motivation for them to complete the job successfully.

If you are struggling with credit card debt and cannot pay it back on your own, consider the benefits of debt settlement to improve your finances.