get out of debt with no equity in my home - There are a variety of options available to help pay off your debt. Each one has its positives and negatives. The most common way for home owners to eliminate there credit card debt is to refinance their mortgage and roll all the debt into one payment. However if you have little to no equity in your home there are still ways to get out of debt.

One option you may want to explore is a 125% home equity loan. In these loans you are able to borrow up to 125% of the value of your home. Most programs will require excellent credit and mortgage payment history. Most times you will also be limited to the actual cash out you can take, this amount will vary by lender so ask your mortgage broker to assist you in finding the right program.

Another option to paying down debt with no equity would be zero percent credit cards. They do offer a great no interest loan, but often it is only for a short period of time. Normally 6-12 month. If you miss a payment with one of these cards you generally will change to a default rate in the range of 24%. While they may seem like a good idea zero percent credit cards do have some drawbacks for the equity challenged home owner.

Another option to paying off debt would be a unsecured personal loan. Although the maximum dollar amount a bank will lend you is generally under 10,000 and have interest rates that are only slightly lower then credit cards they can still help pay off credit cards faster.

If you are so far in debt that making your payments is becoming a hardship you may want to look into bankruptcy or credit counseling. Bankruptcy can eliminate your debt if you qualify for a chapter 7. If you qualify for a chapter 13 bankruptcy then you will be put on a repayment schedule. Consumer credit counseling is a little riskier then filing bankruptcy. Credit counseling companies will try to negotiate with your creditors on your behalf to try and get you reduced payments, lower interest rates and sometimes smaller balances. Although most companies will charge for this service there is no guarantee of its success.

In addition to over equity products (125% Mortgages) you may qualify for a 100% Option Mortgage. These programs have a minimum payment option that can free up substantial cash flow and savings. You can then use that cash towards paying off other bills.

The minimum payment option can also be combined with a 40 year term for minimum payments as low as $250/month for every $100,000 borrowed.

Paying off your debt is only the beginning. you need to realize what caused the debt in the first place. Statistically speaking, most people have large sums of credit card due to some unforseen incident. Whether it was a medical problem, loss of job, divorce, etc. the important thing is to make sure that the problem has been solved. I would also recommend starting an emergency fund of 3 months salary. That way if another unforseen problem occurs, you won't have to resort back to credit cards.

Bankruptcy - Commonly abbreviated as the two letters BK, Bankruptcy is a legal protection afforded by court proceedings intended to provide relief to an individual or business unable to repay its debts.

Many lenders realize "bad things happen to good people". There are many programs available to those involved in a chapter 13 BK to help them refinance their current mortgage and pay off their bankruptcy. The lenders are going to look for a consistent payment history since the Bankruptcy was filed.

There are many loan programs for people who have filed BK. These programs are for refinancing and purchasing homes.

Although these programs will have higher interest rates, these loans are a great way to reestablish your credit profile and just two years of timely payments on a mortgage will do wonders for your credit score. Most borrowers refinance these loans within 4 years of obtaining them because they become eligible once again for certain conventional loan programs.

A legal procedure initiated voluntarily by the borrower or forced by creditors when the borrower does not make payments. Then the court divides the borrower's property among creditors to pay off obligations.

With bankruptcies at all time highs the courts have changed the bankruptcy laws making it much harder to file for Bankruptcy. Credit card debt is at an all time high and this is one reason for the numerous bankruptcies. Consult with a mortgage consultant before filing bankruptcy to see if there are any debt consolidation options available or any other options available to save you enough money so that you can avoid filing bankruptcy.

If you have filed bankruptcy in the past the odds are there is a mistake on your credit report somewhere. Maybe an account didn't report as being in the bankruptcy and still shows an outstanding balance which would adversely affect your credit. This is why it is crucial to always check your credit on a yearly if not quarterly basis.

Lenders will still lend you money if you have filed a BK. However they will require a certain amount of time to be placed between you and the discharge date. Often they need to see you have re-established yourself.

Countrywide offers great programs for individuals ONE DAY (1) after they have had their bankruptcy discharged!

For individuals, Bankruptcies come in two common varieties:
Chapter 13 Bankruptcy
Chapter 7 Bankruptcy

Chapter 13 Bankruptcy reorganizes debts under the supervision of a court ordered repayment plan. This is commonly referred to as a wage earner plan. Part of the individual's income is appropriated every month for distribution to their creditors.

Chapter 13 allows the individual to save and keep their property, and very often provides 3 to 5 years to repay debts.

Chapter 7 of the Bankruptcy Code provides for liquidation of an individuals non-exempt property, which may include the primary residence of the individual.

Recently bankruptcy laws have gotten more strict. If you have equity in your home you may want to consult with us to assist you with avoiding bankruptcy.

Most non-prime mortgage lenders have loan programs to help homeowners who have filed bankruptcy. Many even offer loans to those who are only one day out of bankruptcy.

If someone is already in a Chapter 13 bankruptcy and own their own home, they may elect to apply for a Chapter 13 buyout loan.

A Chapter 13 buyout works similar to a cash-out refinance, except that the cash taken out from the refinance is used to payoff you bankruptcy debts, thus discharging from your Chapter 13.

New Bankruptcy laws are more strict and the BK will be set to a 5 year pay back plan.
Before filing for BK consult us to see if there are alternatives.

If you have filed BK and want to obtain a mortgage, find a mortgage professional who specializes in helping the credit challenged. You will usually find this with a mortgage broker due to the broker's ability to place loans with multiple lenders. Having this ability allows the mortgage broker to research a lender with niche or special programs that do not conform to the standard guidelines.

Broker's get used to working with certain lenders and fully understand their guidelines which makes the mortgage process easier and go through with less challenges.

How to rebuild your credit after a bankruptcy - After your bankruptcy is discharged your credit score will fall dramatically. There are however ways to rebuild credit and increase your score quite easily. One of the best methods is a secured credit card. These cards are fairly easy to obtain and are available through most major banks. Rent to own centers often report to the credit companies and are another great way to rebuild your credit. Just be sure to keep the payments manageable to avoid repeating the financial problems you are trying to recover from!

After your bankruptcy is complete, you will have an opportunity to start rebuilding your life - and your finances. Although bankruptcy will stay on your credit report for up to 10 years, there are plenty of things you can do now to start building a good credit report. Two of the most important things you should do are borrow money responsibly and make your payments on time.

Here are some other tips to help you rebuild and improve your credit rating after your bankruptcy discharge:

1. Give Yourself Credit: The best way to rebuild your credit after a bankruptcy is to establish accounts that will report positive information on you. Get a single credit card with a small credit limit, use it very sparingly and pay the entire balance every month before the due date.

2. Read the Small Print: After your discharge, you may get several offers for credit cards and other loans. Know what you’re getting into before you accept these offers. Make sure you understand the interest rate, any other fees and the expected payments before you open a new credit account.

3. Prove It: Even after your debts are discharged, you may need proof that you don’t owe these creditors any more. Keep a couple of copies of your discharge papers from the court so that you can prove certain debts were discharged if you need to in the future.

4. Pay on Time: Most credit cards and utilities report late payments to credit reporting agencies. If you make late payments every month, potential lenders will continue to see you as a poor credit risk. Also, most credit cards add a late fee whenever you’re late with a payment. Avoid late fees and reports of late payments by paying your accounts in full before the due date.

One thing that everyone who has filed a bankruptcy needs to do is check their credit report. Make sure everything is now accurate. Often a creditor will have been included in a chapter 7 bankruptcy and still show a balance owing. This information should be disputed. Your credit report should be accurate.

There are five major types of information used to calculate a FICO score and they are listed below. Each type of information counts as a percentage of a total FICO score and the calculations may vary a bit from each credit agency. This is a good rule of thumb to follow:

- 35% Payment History
- 30% Amounts Owed
- 15% Length of Credit History
- 10% New Credit
- 10% Types of credit

Many of our customers rebuild their credit by using their home equity to refinance and take cash out to consolidate debts and pay off all of their old bills, giving them a lower total monthly obligation which they can pay consistently every month. It is a fresh start for customers who are coming out of a bankruptcy, and paying a mortgage on time month after month is a great way to improve their credit score.

If you are in a bankruptcy or have been recently discharged, you may still be eligible to refinance your home. Your mortgage broker will have programs that can fit your needs. Whether it's taking a little cash-out, or simply paying off some items not covered in the bankruptcy, it is a good idea to refinance to get you back on your feet.

When rebuilding your credit after a bankruptcy it is extremely important to make all of your payments on time. Any adverse payments on a bankruptcy will limit your options on obtaining a mortgage.

Make sure that all of your paid off credit cards are closed out. You should give your credit card companies written request to close your accounts. Open credit lines with a zero balance (especially if you have many) can potentially hurt your credit rating. Only keep the cards you use regularly and the ones you have had the longest.

You should check your credit report three to six months after the bankruptcy discharge and make sure the discharged accounts are being reported as "discharged in bankruptcy". Oftentimes, creditors report the discharged accounts as charge off, collections, open unpaid or other such ways which will have a more detrimental effect on your credit score. It is very important that you keep all bankruptcy papers, especially the list of discharged creditors.

If you have not filed your bankruptcy yet, be sure to consider carrying some liabilities through the BK (ie. do not include them in the bankruptcy). This can dramatically influence your ability to re-establish credit following the filing, but is not always available.

Once your bankruptcy has been discharged your credit will need to be cleaned up. Keep copies of all bankruptcy documents and attain documents from each creditor (credit cards and collection agencies) that indicate that the debt was removed via bankruptcy.

Using credit is a proven way to re-build credit after bankruptcy. If you cannot get a credit card, apply for credit from department/drug stores and gasoline companies for expenses that you normally pay cash for. Also apply for a debit card, which you need to first deposit funds. You may also want to have a relative co-sign your credit application to ensure approval. Most important of all, once you are extended credit, be certain to make payments on time.

Try your best to maintain your debt to be roughly 30% of your income. Don't overextend yourself and bite off more than you can chew. Develop a budget plan and make sure you pay your bills on time.

There are many law groups who use the Fair Credit Reporting Act to go after collection companies and the credit bureaus and force them to show the collection account follows all the guidelines of the act. many times there are errors in the details, but even the smallest error can be grounds to have an account pulled off your credit report.

Bankruptcy Means Test - One of the most controversial and complicated additions to the new bankruptcy law is the requirement that every debtor complete a bankruptcy means test before filing bankruptcy. The bankruptcy means test is a complicated mathematical calculation to determine what type of bankruptcy a debtor must file.

You must enter income and expense information onto the appropriate state bankruptcy means test form and then make calculations using the entered information. Debtors must provide the calculation and results of the bankruptcy means test to the bankruptcy court as a part of the debtor’s schedule of current income and expenditures. The two main variables for the bankruptcy means test calculations are: Median State Income Figures as published by the U.S. Census Bureau and the IRS National Standards for Allowable Living Expenses.

You will fail the means test and be denied bankruptcy if you make too much money for your particular state. As an alternative to bankruptcy, you should talk to a mortgage professional about a cash-out refinance loan that could provide you some relief.

If you cannot pass the means test, you cannot file Chapter 7 bankruptcy, which erases all of your debts. You can still file Chapter 13 bankruptcy, which sets a plan to repay sometimes all, but usually only part of your debt. Repayment is made over 3 to 5 years.

One purpose of the means test is to show the court you deserve to file bankruptcy because you really cannot pay the debt. When considering a bankruptcy its important to work with both an attorney and a mortgage professional. The attorney can guide you and direct you with important decisions such as the means test. The mortgage professional can work with you as you go through BK and help you re-establish your debt. This can make homeownership or refinancing simpler then if you walk thru it alone.

New Bankruptcy Laws - What They Mean to Consumers - With the new laws that went into effect in October 2005, many consumers are finding it more difficult to file Chapter 7 bankruptcy. Under the old laws, consumers could file Chapter 7 and wipe out most of their unsecured debt completely.

Under the new laws, they must first attend counseling, which helps determine if they can file Chapter 7 or Chapter 13. Most higher-income consumers will be forced to file Chapter 13, which is a debt repayment plan that doesnt wipe out the debt until the repayment plan is finished.

You can still pay off your Chapter 13 bankruptcy through a refinance. Many lenders have programs that allow you to pay off your Bankruptcy using the equity in your home.

There are some lenders who are willing to lend as soon as one day after bankruptcy has been discharged.

Speciality lenders will loan to borrowers in a Chapter 13 plan. The first test is the borrower must have paid on time to the trustee for at least six months. Some lenders want at least 12 or 18 months with no late payments. The next step is to get approval to pay off the chapter 13 plan from the trustee handling your case. The test for approval is the refinance must show a benefit over the current payment plan. If approved, the lender will need to see the trustee approval. The rest is a combination of credit score, ltv, and income with the specialty bankruptcy friendly lenders willing to lend with scores in the 500's with homes that have a high amount of equity.

Managing Credit Cards to Raise Credit Scores - Managing credit cards is more complicated than managing a mortgage or auto loan because you have multiple debts rather than just one. The number of cards can vary, balances can be increased or paid down, balances can be shifted between cards, new cards can be opened, and existing cards can be closed.

As a general rule, try to keep the balances on credit card accounts to less than fifty percent of the available credit limit. Going over this fifty per cent threshold will have a negative impact on the borrower's credit score.

When you pay off a credit card, it is wise to leave it open. You can cut it up if you want, and never use it again. The zero balance and the length of time the card has been opened will help to improve your credit score.

Having to many credit cards with a balance may also affect your credit score in a negative way. Closing some of your more recent cards and leaving the cards with more of a history open may help you if you have numerous cards. Each individual person is different depending on card balances, amount of time opened, and payment history.

If you have a close friend or family member with an excellent credit profile you can be added as an authorized user to their credit card accounts. This will substantially increase your credit scores. Doing this will not harm the primary card holders credit; it can only improve the credit score of the newly added authorized user!

To help raise your credit score you can request a credit limit increase to bring your balance to credit limit ratio within the preferred fifty percent mark. However you must not charge more on the credit card. The important thing to remember is to use restraint and common sense at all times when dealing with credit card debt.

Using your cards to make regular purchases, and paying them off every month in full will also help to increase your score. Make sure to not ever exceed 50% of any cards limit.

Having 2-4 credit cards with balances of 20-39% of your maximum limit is ideal for helping to maximize your credit score. Try not to ever max. out your credit cards. Do not close out accounts when you pay them off. Do not allow yourself easy access to all of your credit cards after they are paid off. Have a credit card put away somewhere that is only to be used for emergencies. I have heard of people placing their credit card in a cup of water and freezing it in their freezer so that they do not have easy access to the card. This way it is still available for emergency use as opposed to cutting the card up.

There are several factors that make up the credit score and your mortgage consultant can coach you through some basic strategies to improve your credit score. This means very conservative use of credit cards, paying off debt as much as possible and not applying for additional credit cards. Also, don't close any existing credit accounts even if you don't use them. Always take advantage of the free annual credit report from www.annualcreditreport.com (which is the only FTC approved credit reporting site) and start working on improving your credit scores several months prior to applying for a new loan.

Most importantly, pay all the credit card debts by the due day. Most credit card companies do not report late payments to the credit bureaus unless they are more than 30 days late, although they may assess a late fee. Late payments have a profound negative impact on personal credit profiles. Late payment history does the most damage to credit scores when the lates are recent, habitual, and lasting.

People with bad credit can increase their credit scores by obtaining new trade lines in the form of secured credit cards.

Do you know the interest rate on your credit card? If not, chances are its very high. You should try to make it a habit to call your credit card companies every six months to request a lower interest rate. If you have no late payments the credit card company will likely reduce your interest rate, saving you money every month.

Don't wait until the point that you have no money to refinance. If you get to the point that you start charging on your credit cards to get by. Those high balances on your credit cards, and possible late payments will detrimentally affect your credit. Interest rates will go up, even on cards that you haven't been late on. Also they will start dropping your available credit on your tradelines.

About 5 open credit accounts is best for your credit scores. This includes credit cards, car loans, student loans, etc.
If you are going to close one or more of your credit card accounts, close newer accounts. Accounts that have been opened longer help your credit score more than newer accounts.

getting out of debt - If you are like most Americans now days you probably have a large amount of unsecured high interest debt. This is usually on high interest credit cards and unsecured personal loans.

Most people don't even realize how much interest they are paying on their credit card balances. Credit card companies headquartered in Delaware or Utah or the Dakotas are not regulated as to how much interest they can charge, and if you take a look at your statement very closely, you will probably find that your credit card issuer is in one of those states. This means they may be charging you 30% or even 40% APR. Consolidating debts from these lenders is a huge win for most consumers.

The first thing to do is to figure out how much debt you actually have. most people don't realize the amount of debt they have and how much it costs them each month. Once you do that, you need to get a plan established to pay the debt off in the shortest amount of time possible. The fastest way to pay off your debt is to utilize the equity in your home. It's very simple. All you do is restructure your mortgage to include your debts. This will give you a surplus of disposable income every month. If you use the surplus to attack the priciple balances, you will be debt free in 5-7 years.

One way to get out of debt is to refinance your mortgage and consolidate all, most, or some of your debt into your mortgage. To do this you would need to have some equity available in your home. By refinancing your mortgage you can save hundreds of dollars per month and many times even thousands of dollars per month off of your monthly expenses. Consult a mortgage professional today to find out how much money you can save.

Another advantage of a debt consolidation refinance is that the interest you pay is probably tax deductible. This can be a huge advantage come tax season. Be sure to ask your accountant if your mortgage interest will be tax deductible.

Some important tools to help you measure if a refinance loan is beneficial are;

Have you reached your credit limits on cards and loans?
Have you carried a large balance on your cards for longer than 2 years?
Has my interest rate increased due to late or slow pays?
Will it take you longer than three years to pay off your current balances?
Are you unable to pay more than your minimum balance due?
Have you noticed a decrease in your credit score?
Have you been more than thirty days late on your payments?

If you find yourself answering yes to three or more of these questions, it will most likely be in your best interest to consider a debt reduction loan that will allow you the opportunity to clear up your credit debt.

Many people are tempted to enlist the help of a consumer credit counseling agency. Although they can help get your bills in order, there are a few negatives that can go along with this decision.

For example, on your credit report most of your creditors will report that you are in consumer credit counseling. This can be seen as a negative mark when you are applying for a mortgage loan. Many lenders view this as the same thing as a Bankruptcy (chapter 13) and will underwrite the loan accordingly.

Other lenders will simply ignore it. It's best to talk to a competent mortgage broker and find out all your options.

Ask your mortgage professional to perform a cost analysis to determine if consolidating your credit card debt and mortgage into one loan will be beneficial. It is difficult to determine what is the best decision until you do the math and let a comparison show you how much you can save from a debt consolidation loan. Many times, the savings can be substantial since the average interest rate is much lower.

If you are planning on consolidating your debt with a new mortgage be careful to avoid the spending habits that lead to so much debt in the first place. Consolidating unsecured credit card debt with a loan secured by your home is only a wise move if you are confident that the credit cards will not get maxed out again.

A good mortage professional who is refinancing you for the purpose of taking cash out and consolodating debt will not only find a loan program for you that provides you with the cash to stabilize your debt, but they will also try to put you in a position where you maintain that stability and don't need to continuously draw upon your home's equity to bail yourself out of debt troubles.

If you are unable to refinance due to any number of reasons, then the more traditional way of getting out debt (and improving your credit) can be employed. Make a list off all your debts with the listed minimum payment of each. Now list beside that what payment you are actually making on each debt. Take all the little amounts that you are paying extra and combine it onto the debt that has the highest interest rate. This will pay down that one fastest saving you the interest you would otherwise have been paying. Once this debt is payed off, then use the same method on the next highest interest rate debt - repeat. This will pay off your credit cards and other debts quickly allowing you to increase your credit score and payoff your debt!

When you are consolidating debt like credit cards, you are dealing with two different types of interest. Revolving credit lines carry compounded interest vs. a home equity loan that carries simple interest. A simple interest loan will make getting out of debt much easier. Ask your loan professional for more information.

You can use debt to help you get out of debt. By using the equity in your home and going into deeper debt against the house you can payoff debt with higher rates. So if your paying 15-18% on a credit card then paying off that card can certainly be a great move!

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