Managing Your Secured Debts

If you are having difficulties coping with your debt, especially unsecured debt (i.e. credit card debt, medical bills, personal loans), we encourage you to contact us. Many of our clients have attempted in the past to create a workable budget that will enable them to become debt free, but to mixed results.

Bankruptcy Relief Network specializes in assisting families like yours with their unsecured debts in order to provide them with real debt relief.

Your circumstances are very different if you are encountering problems paying off your secured debts. Please read the following for ideas about how you can avoid repossessions and foreclosures. Secured debt is the most critical of all debt forms because the creditor has the ability to seize property if it is believed that the debtor (you) is acting in bad faith with regards to payment.

An Important Difference
The Bankruptcy Relief Network program works for unsecured debts only. This is why we always remind our clients to make auto and home loan payments a first priority when paying their monthly bills. The reasons for this are many:

First of all, most automobile financing agreements are structured to allow a creditor to repossess your car if you are discovered to be in default. To add insult to injury, it is important to note that no notice of repossession is required. And if your car is repossessed, some agreements state that you may have to pay the full balance on the loan plus towing and miscellaneous costs, to retrieve your car.

Failure to act quickly often results in the creditor selling the car. This is why if you are having real difficulty making payments, you may want to consider selling your car immediately and using the proceeds to pay off the loan. Using this method, you avoid not only repossession costs, but a severely negative addition to your credit report.

Mortgage Must-Do's
If you find yourself falling behind on your mortgage payments, there are some important steps you should take. First, immediately contact your lender. Many people do not realize that avoiding foreclosure is often as easy as making this contact.

The truth is, most lenders will with you to define new terms if they believe that you are acting in good faith and your financial difficulties are temporary. The results of contacting your lender can vary. Many reputable lenders may reduce or suspend your payments for a short time period. When the payments are resumed, however, you may have to pay an additional amount toward the past due total.

In some other cases, your lender may be able to extend the term of your mortgage or lower your monthly payments. If this is the case, always be certain to ask whether additional fees will be assessed for these changes, and ensure you total up how those charges will be made over the long term.

Lender Won't Negotiate?
If your lender will not accept new terms, be sure to immediately contact a housing counseling agency. These agencies can be found by calling your local Department of Housing and Urban Development office, or alternatively, by calling your state, county or city housing authority. These agencies can frequently recommend a reputable agency that will help you get your mortgage under control.

Is A New Loan A Possibility?
Because rates are near a historic low, it may benefit you to consolidate your debt with a second mortgage or home equity loan. In fact, if you have a lot of equity in your home, this may be your safest bet. But as with anything, it is best that you fully understand the implications of taking on such a "debt consolidation loan". Be especially aware that these loans, like your current mortgage, require your home as collateral, and that missing payments may result in the loss of your home.

A Warning About Debt Consolidation Loans
Be aware that consolidation loan costs can add up quickly. This is because many loan agencies require that you not only pay interest on the loan, but also "points". Points are typically measured as one percent of the total borrowed amount. The easiest way to understand the full costs of these loans is to calculate the payments yourself. This is the best way to determine whether a debt consolidation loan will help, or hurt you, in the long term.

Mini Article Index
About Bankruptcy - the machinery behind bankruptcy.
Are You Deep In Debt - a questionnaire.
New Year's Debt Resolution - break the cycle today.
Credit Help Negatives - some must-to-avoids.
Managing Secured Debt - an important primer.
Seeking Outside Help - what you should know.

Bankruptcy Relief Network
501 W Broadway Plaza A
San Diego, CA
92101-3562
(619) 599-0316