4 Prudent Steps To Stop Home Foreclosure Through Debt Consolidation
Published On June 16th, 2011

Guest Post written by Pablo Gibson

If you are turning prematurely gray with fear of foreclosure and frantically looking for a way out then consolidation of much of your debts might be a solution to your worries. Opting for a debt consolidation plan will help you to show your mortgage lenders that you take your debt obligations quite seriously and have properly restructured your debt so that you can afford to make mortgage payments on time in future. With debt consolidation you can merge your multiple debts and pay through a single convenient payment gateway. Ideally, debt consolidation plan lower both your monthly payments and interest rates considerably. Read on to know the gradual steps to stop home foreclosure through debt consolidation.

Step 1

Your first and foremost duty is to assemble all billing statements for your debts, mortgage bills and correspondence related to a possible foreclosure and scan through them minutely. Arrange for a meeting with a housing counselor approved by the U.S. Department of Housing and Urban Development. To find a good counselor near by your locality, visit the HUD website.

Step 2

Make sure you produce an accurate list of all your debts to your counselor. Request him to provide assistance to consolidate your unsecured debts. A counselor can recommend you the consolidation loans available for you. Generally consolidation loans are home equity loans, signature loans and debt management plans, however you won’t qualify for a home equity loan as your home is already on the verge of foreclosure and poor credit rating might prevent you from qualifying for other debt consolidation loans as well. It leaves you with the last option of debt management plans for which you need to consult a credit counseling agency. Your secured loans can not be consolidated in any way.

Step 3

Through a debt management plan the credit counselor negotiate a lower monthly payments plan with your credit card companies. They convince the lenders to lower interest rates and waive the late penalty fees and finance charges. The counseling agency works as an intermediary. You remain obligated to make the new payments to the counseling agency who further disburses it to the other lenders. You can relieve your worries and debt burden once you authorize the credit counselor to create a debt management plan as well as a new household budget for you. After having a close look at your current income, expenses and credit report, credit counseling agency usually chalk out a suitable debt management plan for you.

Step 4

A three-way call to your mortgage lender, with the counselor on the line might save you from the impending danger of foreclosure. You must let the lender know that you have completely restructured your household budget and debt under expert supervision of a government-accredited credit counselor. Now you can afford to make your mortgage payments on time and so would like to stop the foreclosure. The counselor must convince your lenders to modify your mortgage as part of your financial makeover. Your newly acquired ability to pay back the mortgage loan might convince the lenders to change the terms of the loan and make it more affordable. They might agree to tack the missed payments onto the back of the loan and stop foreclosing the property.

Finally follow the above mentioned point and evade foreclosure through consolidation.

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