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We have a crazy amount of credit card debt that we are looking to consolidate. I have approx. 15 different cards with a total balance of approx. $40,000 all with different but high interest rates. We own a home, but only for 1 year now and we did no downpayment so I don't think we have much equity in the house. What should we do? Is a HELOC still an option for us, what about a second mortgage? Help!!

jenkin7 · Posted: Thu Nov 08, 2007 12:31 am Post subject:

Hello Ajsmom,

First of all you need to find out how much equity you have in your home in order to qualify for a second mortgage or HELOC. With no down payment and just one year, I don't think you have enough equity to cover $40,000.

You may try for a debt consolidation or debt settlement and talk to the creditors about this.

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi Ajsmom,

It will be better if you go for debt consolidation. Jenkin is right that it will be tough for you to qualify for the second mortgage. Find out a good debt consolidation company with lower interest rates.

Thanks,
Larry

Posted: Thu Nov 08, 2007 8:36 am Post subject:

Thanks for your advice. I guess we are going to do it the good old fashion way and just work harder and spend less!

sara

Hi ajsmom,

It's good that you work hard and spend less. But i doubt whether it will relieve you from all 15 cards!

If a second mortgage is what you are looking for, then think twice. there are already 15 cards and then if there's a high rate mortgage that too a second loan on the same property, then i don't think one can manage easily. I'm not discouraging you from taking the second loan but it's a word of advice and i'm really concerned.

Regarding credit cards, I should say that you seek counseling from a credit counselor and try to pay off the debts - first take up the high interest rate debts and then the smaller ones. See if the counselor advises you to go for a debt consolidation or not. I think that'll help. But consolidating 15 cards at a time seems impossible.

Anyway, if you can qualify for debt consolidation program at least for some of the high interest rates debt, then the rest can be paid off if you can follow a tight budget for the next few months.

Take Care

Posted: Wed Jan 23, 2008 8:11 pm Post subject:

The good old fashion way is the right way to do it. Trying to transfer balances to 0% cards will help if possible but you need to learn from this experience. 40,000 CC debt is way out of line ' i'm sure you know that now. A book called Financial Peace by Dave Ramsey will be extremely helpful for you.

adonis · Posted: Thu Jan 24, 2008 2:33 am Post subject:

Welcome guest,

I agree with you in the sense that one needs to learn from bad experiences with their finances. Transferring balances to 0% credit cards is a good option but some creditors do charge up to 3% of the amount transferred as the balance transfer fee. For a large balance transfer, this fee would amount to a huge sum.

dcrum0 · Joined: 18 Feb 2008 Posts: 19 10.23 Dollars($)

First, I agree that a home equity loan/second mortgage is not an option. You would not want to put anywhere near that amount of unsecured debt against your mortgage. If for some reason you couldn't make the new payments they could take your home to pay for the loans.

I also agree that Financial Peace by Dave Ramsey will be extremely helpful for you. With that many credit cards you should follow the snowball effect of debt reduction. Pay the lowest balance first and work your way down the line applying the extra money from the free debt to the next one.

I think you said it best when you said "I guess we are going to do it the good old fashion way and just work harder and spend less!" That is the best advice you could give yourself and the key to financial success. Don't spend more than you make.

Since you are already in this debt you may need to pick up another part time job and put all the extra money toward the smallest debt. You got yourself into this mess, and it sounds like you know how to get yourself out!

chloejoanna · Joined: 20 May 2008 Posts: 37 16.09 Dollars($)

Id say your best bet is debt consolidation.

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