Debt Reduction- Advice On Credit Card Debt Reduction, Debt Reduction Services, And Debt Reduction Plans

Josh R asked:


Background:

My long-time girlfriend and I are considering buying a home together within the next 1-3 years. She owns a condo that she bought before we started dating. Currently we live together in a rented apartment, and she rents out the condo. Unfortunately, the condo is cash-flow negative, and because of the real estate crash, it is now underwater and she would not be able to sell it.

How would the mortgage on the condo and income from renting it be accounted for if we applied jointly for a mortgage on a new home for us?

Her monthly PITI payment on the condo is something around $1250 and it is currently renting for $1025/month.

So, how does this get accounted for? Would the $1250/month be added to our monthly debt obligations (which are otherwise pretty low, around $500/month between us), and the $1025 be added to our monthly income (with some reduction made to account for potential vacancies in the condo)? I.E. if our combined income and debt obligations besides the condo were $14k and $0.5k respectively – would the condo change those to something like $14.75k and $1.75k?

Or, do we simply count the amount of the negative cash flow towards monthly debt? In this case, our income would stay at $14k, but the negative cash flow of ~$450/month (monthly rent x 12, minus 20% for vacancy, subtracted from PITI on condo) would bring our monthly debt obligation to only $950.

Clearly, the way you account for the condo makes a big difference to how well qualified we are as borrowers – so how would a mortgage lender account for it?

A couple more notes:

- living in the condo isn’t an option.
- selling the condo at a loss isn’t an option.

Thanks!

Ezra Alexandropoul

Primerica Debate Team asked:


Here’s the situation: Imagine you have 8 credit card debts totaling $20k or more and you also have a mortgage. You are thinking about consolidating them all into one monthly bill. And this is what you want from the bank:
1) It has no application fees or any upfront fees to pay (such as appraisals on your home).
2) No PMI (Private Mortgage Insurance)
3) An equity builder plan with an interest rate reduction that will accelerate your debt payments and get you out of debt sooner.
4) No prepayment penalties
5) A no fee bi-weekly payment
6) It uses simple interest vs schedule interest
7) It has no escrow (so you would have to set up an account on your own and use it as if it was an escrow). Escrow is used to pay for property taxes. Unfortunately, with a mortgage company, they only pay it once a year. Most of us that own a home pay property taxes on a quarterly or semi-annual basis. It shows you an amortization schedule.
9) No obligation to accept the loan if you qualify.

Vincent Vitelli

Lookingfornames asked:


Hello, I met the lawyer named John H. Ruiz (he hosts a TV program called La Ley) in order to find a way to go down my mortgage payments. I have a conventional mortgage, fixed rate = 6.875%, no penalties, also I’m not in default but my property worths 150k less. What do think about him?…He told me that I have a fraud case, I have to pay him only $600 monthly and the homeowners association (no real state taxes, no insurance, no mortgage, no line of credit)…I may get a debt reduction.
I need your opinions…thanks

Honey Derentis

sweetie asked:


Iive in ca and my house is about 200k underwater. i want to try short selling it if possible but how do i make sure that i get the cancellation of debt AND don’t get taxed in the end? my last option will be foreclosure or bankruptcy but not sure if i would even qualify considering i still have an income. my only hardship is accumulation of debt. my only hope is if i get principal reduction on my mortgage but i heard that this would be very impossible.

Craig Summerhays

Momofseven asked:


We bought house (a foreclosure) in 2005 for $245K. Our loan ppl said our payments would be $1000/mth. We didn’t know about taxes and ins. Or the 2nd mortgage. Payments = $1800 a month.

We are self employed. 6 months later I refinanced the 2nd for repairs and business exp. Now we owe $300K – $200 on first & 100 on 2nd. Things did not continue to go well. We were loosing up to $2K a month sometimes, and getting by on credit cards!

So last year we put the house up for sale and guess what? Yup it still hasn’t sold. We were in credit card debt of $28K then. We’re in for $45K of cc debt now. And out of credit.

We are making enough to pay the mortgages, biz exp and groceries (4200 mth). Not enough to pay the credit cards (1200 mth). I’m at 30 days late with 8 cc’s now. We have no savings; some mths we may have enough to pay a debt reduction firm, but I can’t be sure.

If we lease purchase the house, that will give us money to move away and rent a cheaper house.
I just don’t know how many more months we can hold on. I don’t want to do bankruptcy.

Is there a way to do short sale without ending up with a 1099?

What about foreclosure? I really don’t want to do that but anyone have advice for me?

We’re making as much money as we can to pay our bills; the economy is hurting all small businesses. I never intended to have to use a debt reduction firm, this is very hard. The credit card companies won’t work with us until we’re 60-90 days over they say. I can’t get anyone that speaks good english on the phone at our 2nd mortgage company (Suntrust) and 1st (Countrywide) says they can’t do anything to help, not even deed in lieu.

There is no extra money for anything right now; this month we had to pay $600 to dentist for one of our kids. We have no health insurance. That’s why we couldn’t pay our cc’s this month.

Please don’t roast me; we need help from people smarter than us pls. Thanks.
This was our first house purchase, sorry we were green and didn’t know there would be extra taxes and insurance, esp at an extra $400 a month. Mortgage people have been getting bad press for not fully disclosing details. Sorry if we were one of the suckers.

We have no family other than ourselves -both sides. That *****.

Due to debt to income ratio, countrywide will not refinance, nor will any other companies. I’ve tried.

Please note – we recognised we had a problem last year and tried to be proactive and sell the house so we could pay our debts. Buying too much house was a huge mistake.

I’m just asking for help. Thanks
State = Georgia

Adolfo Pilarz

GrantS asked:


Here is situation

House is in CA, is up side down by 35% and is currently in default.
Mortgage in my name but do not currently live in the house.
There is a first and a second.
The funds were purchase money and have not been refinanced and or no money has been taken out.
If I let the house go back to the bank the fist will only get about 84% of what is owed and the second will be wiped out.
Is there any reason the second can or will seek a deficiency judgment?
If the second “forgives” the debt for what amount of time can they still legally call on the debt to be paid.
If that 35% turns into debt reduction will that become ordinary income and be taxed?

Burton Lapointe