Credit card debt can occur for a variety of reasons and can be dealt with in many different ways. However, there is a lot of misinformation out there, some of it from well-meaning individuals and some of it from the credit card companies themselves. With that in mind, let’s try to clarify some misconceptions.

Profit Oriented 
Credit card companies would like to make as much money as possible from you, so you can not go to them to expect help in paying off you credit card debt. They make you think that is true, but it is not. In general the deeper in debt you are to them the better it is for them to make a profit from you. When you have a large debt the likelihood of paying it off is less because it is so big. So many people will pay a small amount each month. Just make sure this amount is much larger than the suggested monthly minimum.

Monthly Minimum Payment 
Probably the number one money maker for credit card companies is strictly following the common misconception that you can pay off your debt through simply paying your minimum monthly payments. Many insist that by paying your minimum you can keep everything under control, but what they do not mention (outside of the fine print) is that your monthly minimums are really just going to pay down the interest you’ve accrued – your debt remains the same. Only rarely does the money you pay each month actually go into paying down your debt.

How the minimum monthly payments are derived is unique to each credit company. It is a mystery that you yourself have to solve, if you really want to know. Sometimes the formula is buried in the fine print for the brochure that they send you when you first get the card. And sometimes you have to call to find out how they actually do compute it. It is generally considered that the minimum monthly payment covers the interest and maybe a few dollars are left over to pay on the principal. In any case if you only make a minimum payment you will not make any appreciable change in the amount owed and it will be (many) years before you pay off the bill if you don’t continue to charge on the card.

Drive You to Bankruptcy? 
Finally, there’s a great many people who believe that the end goal of a credit company is to drive you to credit card bankruptcy. This is both ridiculous and wrong. The truth is they would want you to find a way of prevention from bankruptcy. What credit card companies truly desire is to keep you in debt, not in a financial state where you can’t make payments or they have to accept less than the total you owe them as would occur after filing bankruptcy. That is why they are quite happy to give you a helping hand in regards to paying down your debt. Notice that the statement was ‘paying down’ and not ‘paying off’. As mentioned above, credit card companies want you in debt and paying regularly. It is how the industry makes its biggest profit through your continuous payments.

One proof of the above is that the quicker you pay down your debt, the more likely the credit card company is to increase your spending limit in order to encourage you to use your card more often and thus to ensure that your debt never entirely goes away. There is nothing a credit card company hates more than a person who never uses their card – they want you to continue charging.

The truth is, that credit, if used wisely, is a useful tool in a largely (and increasingly) cashless society. However, if you are not careful, it can result in adding unnecessary debt to your financial responsibilities, something which can result in permanent harm to your financial stability in this uncertain time.

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If you miss one month, you will receive a letter from the bank or mortgage company. A late fee will be assessed and added to your next payment. Most lenders will tolerate one missed payment. Should the payment be missed on the second month, a breach or demand letter is sent. During this stage, homeowners have one month to pay all late fees and payments. This is the initial; stage of foreclosure and typically can range up to 90 days.

If owners do not comply within the allotted 30 days, the bank then begins the foreclosure process. A legal process will be initiated and the home will be recorded as foreclosed in public records. The bank will then issue a public notice to newspapers stating the home is foreclosed and the debt records are published. This step usually takes 15 days to complete.

Once the second step is completed, the home is legally deemed foreclosed. The bank or lending agency will set a specified date for auction or sale. This process varies in time. It will depend on state laws and regulations. If your state has a non-judicial foreclosure, meaning it does not have to be settled in court, the sale can take place within 2 months. A judicial process can take up to a year.

Some states will allow the owner to buy the property back once it has been listed for sale or auction. This process is also determined by the state in which the home is located. The entire foreclosure process typically takes between 2 and 6 months. Some foreclosures may move faster or slower, depending on the sale or auction terms.

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The more common cause of foreclosure is when a homebuyer fails to meet monthly mortgage payments on a property in which a security interest is given to the lender. It is the legal procedure where the government takes control and ownership of a certain property as a consequence to the failure to meet payment obligations. The property may be disposed in an option to pay for the investments made by the lender. In cases that the auction is not able to recover the entire amount, the borrower is still subject to a deficiency judgment for the remaining balance.

If you are facing the grim prospect of foreclosure, it is extremely important that you recognize your serious debt problems. This condition may be brought about by a lot of reasons. You tend to lose control over your financial stability due to certain complications in your personal circumstances, unwise decisions and bad financial management. You may also be spending more than what you are actually earning. All these will pull you deeper in the debt quagmire which may wind up to foreclosure of your properties. At this very critical juncture, it is highly essential that you explore practical Houston stop foreclosure options.

Even if foreclosure can be your best way out of your financial obligations, this will lead to serious implications in your overall credit reputation and standing. When serious financial problems start to show their ugly heads, it is very important that you immediately seek the assistance of Houston bankruptcy lawyer.

With the timely assistance of a competent Houston bankruptcy attorney, you will be able to properly assess your financial situation. You will able to determine if your problem is just a transient financial setback from you will be able to recover in due time or is it already an indication of a problem which you will not be able to handle at all.

Before things turn unmanageable, you should explore your options and weight your alternatives to stave off foreclosure. The simplest and most expeditious alternative is to seek the help of relatives and friends for some financial assistance until you are able to sort out your finances. It is important that you work out your timeline and roadmap to financial recovery when discussing your situation to your relative or friend.

You should also talk to your lender and discuss your financial situation. Lenders would be more willing to explore other options as foreclosure would serve their interest as they primarily earn on the principal and interest on the mortgage.

It is possible, work out for the re-financing of your loan where the interest and payments in arrears and other charges are included in the outstanding balance of the principal. These may put you on higher loan exposure but it would still be a better option than foreclosure.

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In these bleak economic times, it is not unusual to hear of or know someone in foreclosure. In response to this trend, the Government, the lenders, and private institutions are creating various programs to assist homeowners facing foreclosure. Determining which program suits you best is the difficult part, however.  

Just a few years ago, refinancing your mortgage seemed to be the best option for the majority of homeowners. Refinancing was popular because homeowners counted on their homes’ appreciation value, and they withdrew equity out of their homes to repay debts. Interest rates were low and lenders exercised leniency toward those to whom they loaned. Unfortunately, the situation today is nearly the diametric opposite, and homeowners must consider other options as alternatives to foreclosure. Among those options are loan modification, short sale, repayment plan, forbearance, reinstatement, and bankruptcy (always a last resort).  

Performing a loan modification on your mortgage can result in the terms of your loan being modified to something you can afford each month. There are many ways you can modify your loan, but there is only one best way of doing it. If you modify your loan based upon the terms your bank offers you, you simply won’t receive the best deal possible. This is why it is important to choose a party not affiliated with your bank to negotiate your loan modification.

Borrowers must recognize that a bank or lending institution is a business that is driven by profit. Accordingly, they will always offer you a deal that benefits them far more than it benefits you. They’ll offer you a short-term solution to a long-term problem and most borrowers default on their loan again within six months of their modification. A properly performed loan modification can reduce your principal, monthly payments, and interest. It is not uncommon to hear stories about people who have had their principal balance or monthly payments cut in half! It’s critical to understand that every case is different and the final outcome is dependent upon many variables, including the lender’s cooperation.

The lenders will only agree to a foreclosure alternative if they are losing less money than they would be if they foreclosed on the property. It is the job of your negotiator to help them reach this conclusion based upon the results of a mortgage audit, a statement of the homeowner’s hardships, and so forth.  

Before negotiating any loan modification, it’s essential to get a forensic document audit performed on your mortgage. A mortgage audit determines if any laws were broken during the servicing of your mortgage. During the audit, your mortgage agreement is reverse-engineered to determine if all calculations are correct and if they adhere to state and federal lending laws. Most loans that were originated within the last 5-7 years contain at least one violation. You can use any violations found in your loan agreement as powerful leverage in the negotiation of your loan modification. Your bank will, almost magically, become far more willing to work with you after you present to them all the violations for which they are responsible. Homeowners can technically attempt to collect monetary damages through litigation; however, it almost always seems more cost-effective to exploit these violations to reduce your principal balance or interest rate via negotiation.  

Another alternative to foreclosure is selling your home through a short sale. A short sale is when you sell your home for less than its current value and your lender forgives the difference. A short sale can present a welcome opportunity for someone who owes much more than their home is currently worth (in the industry, this is known as being “upside-down”). While there can be repercussions such as deficiency judgments and tax consequences, a properly considered and performed short sale can eliminate this.

A short sale can potentially be an ideal alternative to foreclosure assuming the bank agrees to forgive the remaining balance of your mortgage. Banks typically agree to a short sale if the money they are losing in the sale is less than what they would be losing if they foreclosed on the home. If you are contemplating a short sale, finding an experienced individual to negotiate your short sale can save you hundreds of thousands of dollars, depending upon your situation.  

So, as you can see, there are many options available to consumers that are alternatives to foreclosure. Unfortunately, many variables come into play during the qualification and negotiation phrases. The importance of having a knowledgeable individual to negotiate on your behalf cannot be understated. If you have ever attempted to communicate with your lender about your situation, you could probably agree that they attempt to railroad you: they subject you to an endless loop of hold music, transfer you multiple times, use confusing industry jargon, and often don’t know enough about your entire situation to reach an intelligent decision. Having an experienced individual to handle this for you can help rupture this vicious cycle.

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If your home has been foreclosed on, there is no way to save your home. The important thing is to save your home from foreclosure before the foreclosure is finalized.

Because this issue is foremost in the minds of our leaders in Washington right now, there are a lot of programs to help you stop foreclosure and keep your house. Talk to your lender first to find out what you can do to stop foreclosure. You may be able to do a “loan modification” on your mortgage and get the payments down for you. Some lenders also allow you to add the missed payments onto the end of your loan.

You need to find out if you have a “Right of Redemption” in your mortgage that may give you up to a year to straighten your situation out and to get back on track with your payments.

It is by far preferable for you and your future to stop foreclosure and sell your house before the foreclosure is finalized. If you try to sell you house and cannot get enough money to pay off the loan, you may be able to do a “Short Sale” with your lender. This is where your lender agrees to take what they can get and give you a release on your mortgage.

Often times lenders will not consider allowing you to give your house back to them by you deeding it back to them with a “Deed in “Lieu of Foreclosure” unless you have had a terrible hardship. Your hardship has to have been very serious such as death of the larger breadwinner, loss of jobs, a health situation or similar. A natural disaster may count if your county was registered as a Federal Disaster.

In this situation it is by far better to stop foreclosure in its tracks before it goes to the Sheriff’s Sale because as mentioned before there is no way to save a house once foreclosure sale has taken place.

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In yesterday’s world where the stock market was solid and the unemployment rate was standard, bankruptcy had a negative stigma attached to it. Many people thought that hiring a bankruptcy attorney was a last resort in coping with financial difficulty. However, from the standpoint of today’s plummeting economy, where foreclosures are the norm and significant debt is the standard of living, many people in financial debt are now resorting to bankruptcy as a starting point. As the economy continues to tumble, attorneys report the number of bankruptcies filed in recent years increases almost twofold in many parts of California. Debtors’ fear of credit harm due to filing bankruptcy may be significantly outweighed by the benefits to their estate of filing bankruptcy.

Filing for bankruptcy provides numerous benefits to debtors depending on the type of bankruptcy filed. Some of the most crucial benefits include eliminating a second mortgage, a complete hold on any foreclosure proceeding or lawsuit, and discharging most or all debts. Bankruptcy is broken down into numerous sections with the most common ones for individuals being Chapter 7 and Chapter 13.

Chapter 7 is also known as liquidation. Under Chapter 7, a trustee is appointed to collect all the debtors’ applicable assets into a central trust estate, convert those assets into cash, and distribute the proceeds to the proper creditors. Those assets which are not applicable are considered exempt and are kept by the debtor. It will be the debtor’s bankruptcy attorney who will help classify certain estate assets as exempt. Individuals may be completely discharged from personal liability for dischargeable debt, which is established through application of a “Means Test,” which is a test used by courts and lawyers to determine bankruptcy qualification.

On the other hand, Chapter 13 is geared towards those debtors with a continuous source of income. Chapter 13 allows debtors or their attorney to propose a repayment plan to pay outstanding debt to creditors. Debtors benefit from the repayment plan by retaining valuable assets in their estate, such as their home.

Ascertaining whether a debtor should file for Chapter 7 or Chapter 13 depends on several factors including but not limited to a debtor’s income, the type of assets they own, the amount of debt incurred, and whether they qualify for one chapter over the other. However, since each debtor’s circumstance differs, achieving the best results in filing for bankruptcy will likely require advice from a qualified lawyer, who will protect your assets to the highest extent legally possible.

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