We have all heard the offers made by those bill consolidation loans companies. Let us help you get out of debt. Many of us have went as far as to consider their service as a opportunity to maybe just do that: get out of debt. What exactly does it mean for you if you take the service of a consolidation company?
Debt consolidation companies will combine your monthly payments into one lump sum payment. They do this by negotiating with the agencies that you own money. Many times these consolidation companies can get your debt dropped down or possibly even your interest lowered. This allows them to combine your debts and you come out paying less than you were when you were paying all of them separate. Many of these consolidation companies take credit card payments, some take bank loans, car payments, medical bill consolidation, etc. Well all this sounds great right? You have one monthly payment instead of twenty and the amount is even lower. So what could possibly be wrong with consolidating?
When you consolidate your bills you show signs of not being very good with credit. Creditors see this as an inability to pay your bills even though you are still making payments on them. This will affect your credit score. How badly it will affect has to do on a number of factors such as the amount you consolidate, the number of payments you consolidate, etc.
Once you consolidate your bills you should also be aware that you are unable to use any credit that you still have for instance if you consolidate a credit card with $300 available on it you will not be allowed to use the card to spend the $300. Most consolidate companies will also close your account once they are paid off. You will not be allowed to retain any credit that you previously had consolidated. Once a bill is paid off and the account closed the consolidation company will either put that amount toward another of your bills or you payment will be dropped.
Despite how good consolidation companies make their service sound it is something that should only be considered if you can not make your bills. The look on the outside is bright and sunshiny but the outcome is much more dark and cloudy. Yes, you may be able to pay off your debt cheaper and sooner but you lose any credit that you have built up. Once you have all your bills paid off you will have to again establish any credit you may need and it may not be as easy as you think. You will be considered a credit risk meaning you may have to start back out exactly where you was when you first got any credit at all and work your way back up.
Once you do begin to get credit back it is very important to not let yourself make the same mistake twice. Only get one credit card and only use it for stuff you need. Pay it off if possible each month. Closely watch how you budget your money to avoid over stepping what you can pay each month. A good rule of thumb to go buy is this: if you are married one either yours or your spouses checks should be able to cover your biggest payment most of the time your home, the rest of the income should be able to cover your other bills plus food, gas, and insurance with money left over. This way you know that you can pay what you have. I know this generally does not happen but do not let yourself get into debt where that no matter what is coming in you are behind. If you do you will soon be seeking the service of another consolidation specialist for our debt solutions.
Who is responsible for the subprime mess? Maybe it isn’t the lender or the consumer!
They always say follow the money
So, who stands to gain when a property if foreclosed on? The company holding the note says that they are not in the business of real estate, they simply want their money. The homeowner doesn’t gain anything by losing their home because judgments are entered against them for the amount of the losses that are incurred by the mortgage lender. In addition to the losses that are incurred by the lender, the homeowner is charged for attorney’s fees. In most cases, the attorney is on a retainer by the mortgage company.
Since most homeowners are already experiencing financial problems, they cannot afford their own lawyer to argue the case. Once the house is foreclosed on and a judgment is entered, the property is resold thereby recovering all expenses that would have been lost to the lender including perceived profit. So, the only one who will gain money without having to actually have an interest in the property is the mortgage lender’s lawyer.
Lawyers make money, not just by settling a case. They make money based on drawing out a case so they can charge, in a mortgage foreclosure case, daily fees. The longer the case is drawn out, the more the lawyer gets, even if he does no work at all during that time. Now, what if the lawyer had more than just those fees to gain?
Lawyers are not precluded from owning stock in mortgage companies with whom they have a retainer agreement. If a mortgage contract sails along without ever going into foreclosure, the only money that the poor lawyer would make would be the retainer; this would make for a not so happy lawyer.
So, if you and a bunch of other lawyers get together to contemplate your plight what might be suggested as a means of increasing your profit when these stupid people keep paying their mortgages? Oh, wouldn’t it be nice if you could somehow get the mortgage companies to sell to people who couldn’t actually afford to make their mortgage payments? Ah, but it has to look like they can afford to make those payments at first otherwise someone would pass a nasty little law that would keep the companies from selling to those perfect consumers. Owning a home is the American dream right? He, he, hehow about an adjustable rate mortgage?
Who’s to guess percentage of lawyers are found on the Boards of Directors of the mortgage lenders. The adjustable rate mortgage was a beautiful thing. It
allowed the consumer to at least look like they could make the payments. The more of these notes sold, the more the stocks of the lenders went up and if the whole thing tanked, the more fees could be applied. Either way, the lawyer was not going to lose a dime.
Gosh, mortgage contracts are complicated aren’t they? Why do you think that is? Well, one thing you can count on is that a lawyer wrote those contracts and amongst all that drivel is the one paragraph that the lawyer truly cares about and that is who pays the “reasonable attorney’s fees.”
Who determines what’s reasonable? The lawyer does, of course. If you have a problem with the attorney’s fees, then you can take the case to a judge another lawyer. What kind of chance do you think you have convincing a judge that a lawyer’s fee is not reasonable? There is another recourse; you could write your local politicians. Would you care to take a guess as to what percentage of those have law degrees? Yeah, it’s a pretty high percentage alright.
There are many, many people out there that might be able to catch up their mortgages however the “reasonable attorney’s fees” may amount to more than what they actually owe in past due payments and since the government does not set caps on what a lawyer might charge for fees, we are at their mercy.
Once the lawyers get involved, nobody wins but the lawyers. So, here we have an industry wide mess which has extended far beyond just the financial markets. This may have been an unanticipated windfall. Stocks are falling daily across the board in every industry. Who benefits from these losses? Follow the money.
To be more safer, we could use some advisor like american home mortgage to get the best mortgage. Because advisors has so many experience about it.