Hello,
I need advice on the best way to pay off around $35,000 in credit card
debt. The accounts have been closed, and are in the hands of various
lawyers and collection agencies.
I do own a home, which I owe $80,000. The market value of the home is
around $175,000. I am and have been current on my mortgage. My credit
score is an abysmal 578, all due to the credit card debt and
nonpayment.
With a cosigner with better than average credit, what are my
alternatives with drawing money from my home equity? And what route
would be the best for me to take, without declaring bankruptcy.
Help would be greatly appreciated.

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Clarification of Question by pouliot-ga on 20 Apr 2006 13:38 PDT

I Live in New Jersey.

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Clarification of Question by pouliot-ga on 28 Apr 2006 21:54 PDT

Thank you so much for the comments. I am taking them under advisement
and hope to get out of this, and never get back in.

I live in Florida where your home cannot be seized for debt you owe,
other than the mortgage. We know several people who got rid of all
there debts except the mortgage on their principle residence by
bankruptsy, with few bad side effects.
Neil

Hi,

I'm sorry to hear of the credit challenges you've had recently.  As
Neil mentioned bankruptcy is one option, although with the new law
passed under the Bush administration it is likely to be more difficult
to be protected by bankruptcy.  Just in case you want to know more
about that law you can go here: 
http://www.credithelpguide.us/newbankruptcylaw.htm

Some common alternatives to bankruptcy that you may want to consider,
given the info you provided, include:

- HELOC (Home Equity Line of Credit) against the equity you've built
up in your house.  Along the same lines you could get a 2nd mortgage
against the house.  I'd suggest being very cautious about doing this
however, since if you are unable to keep up on the remainder of your
1st mortgage plus the HELOC or 2nd you obtain it can be your house
they come after!

- Debt Consolidation is an option.  There are companies out there that
will provide a debt consolidation loan for you to bring multiple
(usually higher APR) credit card debts and consolidate them all under
one loan.  The question is whether you'll be able to do this via an
unsecured loan (that is no collateral - such as your house - used to
back the loan) or a secured loan (putting your house, car, etc to back
the loan).  If you can get an unsecured loan and you fail to make
those payments then you can evoke bankruptcy and your house should be
safe (hopefully).

- Debt Settlement is another option.  I would think you should
follow-up on this possibility from what you've described.  It may not
immediately help your credit report, but can start settling your
credit card debt.  With this option another firm tends to help you
work with the credit cards & collectors to get a decreased
payment/interest that you can afford, and at times set-up a payment
plan.

.....sorry, I hit the Enter button and submitted early. If you wanted
to see some more on these Alternatives to Bankruptcy you could check
out:  http://www.credithelpguide.us/bankruptcyalt.htm  You'll see a
Debt Settlement firm ("Debt Settlement of America") listed at the
bottom you could check out.

I hope this helps and best of luck!

David Church
Author
Credit Help Guide US
http://www.credithelpguide.us