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These have been some tough times
lately. Denver is expected to reach
11,000 foreclosures this year.. New foreclosure filings rose 2.8 percent in
the first half of 2012, compared to last year- the Green
Valley Ranch subdivision has been one of the hardest hit- and consumers are still facing tough decisions
including whether to default on their debt.
 Bills, bills, bills...
Credit card debt has reached over $900
billion nationally and student loan debt is over $1 Trillion. Credit card penalty fees in the US add up to about $20.5 billion a year and
the average U.S. household carries $14,750 dollars in debt on their cards.
"You have to decide which bills
you're going to pay each month. You can't afford to pay all of them, but
you can afford to pay some of them." writes John Ulzheimer for Mint Life. So which bills do you choose?
Facing credit problems and forced
with defaulting on a loan is a difficult place to be for consumers. Ulzheimer
offers suggestions about what to consider before defaulting on a loan.
Which is worse for Your Credit Score?
There are pros and cons to defaulting
on different types of loans, says Ulzheimer. And the bottom line is that
right now even though your credit is probably not great, someday you will need
to get a new loan for a house, a car or whatever, and defaulting on any debt can
affect you for years.
Late Payments: A late payment shows up right away on your
credit report and it doesn't matter if it's 3 days or 90 days late, it's still
late. "But missing payments on your mortgage will eventually hurt your score
more than missing payments on your credit card." says Ulzheimer.
What Matters is the Delinquent
Balance: "When you miss a credit card payment, the only thing that's past
due is the minimum payment." writes Ulzheimer. "When you miss a mortgage loan
payment, the repercussions could cost you thousands of dollars. And when it
comes to calculating your FICO scores, there's a component that measures past
due balances."
The Legal Impact of Defaulting
"You should be very concerned with
the prospect of being sued if you default on any of your credit obligations."
counsels Ulzheimer. "You can't ignore the guy who knocks at your door and
serves you with the complaint. Well, you can, but you'll lose by default and
then you'll be subject to a default judgment. If you do choose to fight the
lender, whom you actually do owe a ton of money, you'll be paying a lawyer to
do it. That's not a cheap date."
Before defaulting, you should
always try to work with the creditor to settle
or renegotiate the terms. They will make more from a settlement than if
they write off the debt. Most companies
will also sell your debt to debt buyers, who are notorious for suing debtors.
"If your debt does make it to a collection
agency, offering a settlement is still a viable offer and you can do this
on your own." says Ulzheimer. "You don't have to hire a 3rd party
debt settlement company to make settlement offers on your behalf (and charge
large fees at the same time)."
Set Goals
The best thing to do, is to pay off the debts with
the highest interest first and try to negotiate terms with the
rest. Default should be the last resort.
What are the alternatives to Derfaulting on My Mortgage?
There are other options to walking away from your home mortgage. Contact your lender and contact a professional REALTOR® who can help you decide if there are other options available for you, such as a short sale.
Read
the full story at MintLife.com
Read: How to Lower Your
Monthly Bills
Find out more about "Strategic Short Sales"
 photo credit: Philip Taylor PT
Posted on August 07, 2012 10:22:12 by  Scott.Shields
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