See if you can get the home equity loan. Get an agreement w/ your brothers that if you get into trouble paying the loan off, your brothers will take over ownership of your part of the mortage. Get 2 jobs. Most of job 1 and all of job 2 pays into the debt. Consolidations won't help you now as you are still getting low interest rates. What you need is to pay around $800/month into your debt. 7 years from now, you will be debt free.
That's just great except that it isn't legally possible.You can't take out a home equity loan and sign a deed of trust on it and then transfer your interest in the collateral away. Also, under art 16, section 50(a)(6) of the Texas Constitution, all owners of the house would have to consent to the lien. We are assuming that a home equity lender would agree to an arrangement with that many parties involved. Also, you can only get a home equity loan for up to 80% of the equity in the house. For instance, if there is $40,000 in equity in the house, you can get a max loan of $32,000. Then there are credit cards AND an equity loan. The equity loan will have a term of 15 years. The solution to debt problems is seldom acquiring more debt. If you can avoid bankruptcy by devising a solution on your own, that is always the best solution. If you cannot, then you may want to consider it. If you go with a service to negotiate with your creditors, beware. Some (not all) of these services take payments from you monthly and negotiate with one creditor at a time. As this process goes along, the creditors that have not been negotiated with yet can file suit, etc.
I'm saying the 3 brothers agree that they will take out a mortgage loan as a group. He's not signing the deed over to the brothers. If he has problems paying his loan, he can sell his rights to the house to his brothers. He is not acquiring more debt. He's just moving it around so he can pay it off easier. If he leaves the debt in his credit cards, he would have to pay $780/month for 7 years to pay off. If he miss 1 payment, the monthly payment may go up to $1200/month, his 7% cards will jump to 21% cards. He is also paying intrest on top of interested accrued monthly. If he can get an equity loan for $50K, he doesn't pay intrested on accrued interest. At 7%, His monthly payments will drop to $292/month with a 7 year payoff. Get er done CD...
Oops my bad. Its $755/month for a 7 year payoff on a mortgage loan at 7% and $450/month for 15 year payoff at 7%.
Whoa, whoa, whoa whoa, WHOA!!! I had a judgement ruled against me 3 or so years ago. I paid that debt off though. So that judgement will stay on my credit report basically forever? How bad does that affect your credit score, a judgement I mean? So the debt paid, does that mark stay forever too? Why do credit scores vary so much? I looked up my credit score through credit monitoring and Equifax has it at like 530 but Transunion has it lil above 600. What is that?
So why exactly would the brothers agree to extinguish their equity and to further encumber their property? Further...it is another line of credit. One in which if he has any disruption to his income and cannot make the notes, he risks a judicial foreclosure.
If you paid off that debt after the judgment, you need to get a release of the judgment. If the judgment goes unpaid for 10 years, they can renew the judgment. An unpaid judgment is awful on your credit, because of you buy a house or car, they can attempt to put a lien on it, subject to any exemptions in the Property Code (of course you have to assert those in court). Some creditors do not report on all 3 bureaus. That may be why your scores vary between reporting agencies.
How do I get a release from it? Does that mean it won't stay on there forever? If I get a release is it off my report?
His brothers can always say no. They can help him out if they choose to. They are brothers anyways. Both are a line of credit but one is a line of credit w/ high interest compounded monthly and with interest rates highly likely to jump to 21-23% in the near future. One is a credit line w/ a flat low interest rate, not compounded and interest paid is tax deductible. It's a potential $620/month in interest savings.
1. You are making the large assumption that the available equity is enough to solve the problem. 2. Tax deductibility may not be there depending on his income and whether his deductions are enough to itemize and whether he has enough deduction available to him after phase out provisions to allow him to actually take the deduction. Bottom line. I have had enough people over the years end up in my office facing foreclosure because they took out an equity loan to pay off unsecured debt with the best of intentions...then somewhere along 15 years, something went wrong.
