Monthly Archives: July 2009

Can I negotiate credit card debt reduction?

We all know that the interest rate of credit card debts is generally higher than the other unsecured debts. In this recession, many people has huge amount of credit card debts and it is almost impossible for some people to make this huge payments every month. But if you do not make payments then your credit report will be affected and your creditor may start asking for payments. In this situation you may ask “can I negotiate credit card debt reduction?”

The answer is yes! You can negotiate with your creditor for credit card debt reduction. It will be better if you can talk directly to your creditor as soon as you find problems to make your payments. It should be a genuine reason; otherwise the creditor may not be interested in the debt reduction.

Though it is always better if you can negotiate with your creditor on your own but if you have several credit card debts which need to be settled then you can also take help from a Non-profit debt settlement company. There are many such companies who can negotiate with your creditor on behalf of you and settle a monthly payment that is affordable to you.

Debt settlement or debt reduction may affect your credit score to some extent but if you continue making late payment or missed payments then your credit score will be much more affected; and then after the debt settlement as you start making payments, you will find your credit score is improving but the last and the most important thing is that you will be debt free from those high interest rate credit card debts.

Deed in lieu of foreclosure:

Deed in lieu of foreclosure is one of the last options that you can take to avoid foreclosure. Deed in lieu of foreclosure is a type of deed that a borrower signs it to the lender to pay off a loan which is already in default and also to avoid foreclosure proceedings. Now the defaulted borrower cannot sign a Deed in lieu of foreclosure to the lender without the lender’s consent. The lender also must accept the Deed in lieu of foreclosure.

A Deed in lieu of foreclosure offers many advantages to both the lender and the borrower. The lender can save lots of money; which he might have to spend for the foreclosure proceeding; if the borrower is ready to sign the Deed in lieu of foreclosure. The borrower can also avoid the harassment and also the deficiency judgment. As soon as the lender accepts the Deed in lieu of foreclosure, the borrower is free from all his liabilities. But the borrower may have to pay tax on the forgiven debt.

A Deed in lieu of foreclosure will have a huge negative affect on your credit report and you may not be able to get a loan in coming 5 to 7 years. The credit affects of Deed in lieu of foreclosure is similar to foreclosure. Your credit score will be dropped by 250 to 300 points and it will be shown on your credit report for 7 to 10 years. So the borrowers choose this option as their last resort to avoid foreclosure.

How long after foreclosure can I purchase a home?

“How long after foreclosure can I purchase a home” is a common question that comes into our mind when we face foreclosure. Now a days foreclosure has become a daily phenomenon. We all know that once we face foreclosure, it affects our credit score heavily. Foreclosure drops your credit score by 250 to 300 points and it is shown on your credit reports for almost 10 years.

Foreclosure is not the end of our life. We should start afresh and try to improve our credit score. Generally you can buy a home in 5 to 7 years after foreclosure but if you can improve your credit score quickly by making all payments to all your debts, then you may be able to get a mortgage loan lot earlier.

Now if you have faced foreclosure in extenuating circumstances, which means thing happened in the circumstances beyond your control, then you may be able to get a mortgage loan in 3 to 5 years. Job loss, job transfer, illness, accident etc comes under extenuating circumstances.

So if you face foreclosure not in extenuating circumstances, then you may have to wait for quite a few years. The best thing that you can do in this time period is improving your credit report so that you can be able to get the mortgage loan with better rates and terms.