The second loan or the Home Equity lines of Credit are usually issued based on the value of the house and secured by the equity on the house. In other words, the financial institutions are safe when lending this money during a possible foreclosure as long as there is equity on the house. However with the downturn in the economy and the crash of the house market, such loans are no longer secure. While most financiers cannot recover the deficiency on the first loans, they can still get their money on a second or home equity line of credit loan even after the foreclosure. Once the property is foreclosed (unless short sale in California), the amount owed becomes an unsecured debt just like a credit card debt. This means the banks can still collect their money.
This short article gives you at least 6 reasons why you should not be ignoring such debts and settle them as soon as possible. Note that it covers only California issues.
Financial institutions are very aggressive in pursuing their debts and they will not hesitate to file a lawsuit to get their money.
Financial institutions and collection agencies are now geared up to aggressively pursue any debts owed to them. After all, it is their dues. But the truth is that many are willing to collect only a fraction of these debts. Unless you know that you can qualify or how to negotiate these loans, you will not get the best deal. Despite the institutions willingness to settle, they can file a lawsuit to recover this money. Once you are talking lawsuits, it is imperative you have a lawyer help you not just a debt settlement company.
1.Settling your HELOC or second mortgage might mean the ability to keep your home.
Many are finding out that the decreasing value of their homes is a disincentive to keep their homes. By settling the second loan, third mortgage on your house or HELOC, you will be left with probably only one loan on the property meaning lower payments and virtually a reduction in the principal amount.
2.Settling a second loan means paying a lower amount for the loan and paying no additional unnecessary interest.
Have you ever actually calculated how much interest over principal you pay once you finish paying mortgages on your house? Well, you will not be surprised to know that you might be paying three times the value of your home. In this case settling part of this loan not only means paying only a fraction of the value of the second or third mortgage but it also means saving the years of interests.
3.Settle loans as soon as possible because policies are getting strict and can change at any time.
Settling a loan is something which is related to the downturn of the economy and your hardship. As the economy recovers, financial institutions are more reluctant to settle such debts. Unless you can qualify for a bankruptcy or want to file for a bankruptcy, you might not be able to take advantage of the situation.
4.The ability to start fresh
Settling your second mortgage or HELOC just as the credit card settlement allows you to re-start fresh in life allowing you to continue surviving in this harsh economy. While you will not be able to have a perfect credit, you will soon be able to recover on your credit if you start making wise decisions how to handle your finances. After all, we all need a fresh start!
5.Bad credit image could do you harm
Till the time you have an unresolved second loan, your credit standing will be compromised. In fact this will continue as long as the second is unresolved. It will be like a black mark on your credit report, and could also affect your FICO score. Moreover this would make future lenders very wary of offering further credit. A bad credit reputation could mean that you have to say goodbye to any future refinancing, new mortgage or auto loans, etc.
6.Assess your HELOC
Check the value of your property and make an assessment of where you stand with your second mortgage. If your think that the HELOC is uncovered by 100% or then this alone should make you consider a settlement strategy as soon as possible.
Choosing a good law firm to help makes a big difference. Our law firm is licensed in California and our work has been recommended by many. We have actually settled many of 2nd loan or HELOC loans successfully. For more information on debt settlement, please visit YourDebtSettlementAttorney.com or call us at (510) 742 5887.