intecel

Right now, I'm currently paying about 100 dollars a month in interest on $8000 worth of credit card debt. I'm paying about 250 a month in barely-over-the-minimum payments.

How does debt consolidation work, and would it look better on my credit than having 8 credit cards / store cards with an 8k balance?

Could my monthly payment go down at all?

Would it be worthwhile to try to get a second mortgage on my house which I don't think I could, since I've only had the house for about 6 months now and only paid off about 1k worth of the balance.

What kind of interest rates do banks give on a loan of 8k, or would they give an 8k loan at all?

Any ideas would be great. I'm starting to drown in debt. I just pulled a credit report and my debt is around 180k.

braisler

If you are looking to reduce your monthly payments, your best bet would be to do it yourself rather than turning to debt consolidators. You can call your credit card companies and explain the situation to them. That you are interested in paying down your debt, but have thought about switching the balance to another credit card for a lower interest rate. Usually, right over the phone, they will cut your interest rate significantly. I have a friend (in an MBA program) who did this will all of her credit cards and cut her interest rates to 0%. Your mileage may vary. But you should be able to get them to reduce the interest rate significantly. The same monthly payment will now go more towards reducing your debt rather than paying off recurring interest.

And this should go without saying, but you have to cut up those credit cards. You can't spend anything on those accounts and pay them down at the same time.

If you do decide to go with a credit counseling service, ask around and do your homework. There are a LOT of them that are just scams. I would say that most of them are scams, but there are a few legit sources for help out there.

Lastly, don't rule out a home equity line of credit. Depending on your local market, the current value of your home may have increase 2-3% in the past 6 months. If you have a $200K house, that is $4-6K in increased equity that you could borrow against. I would not suggest that as a great idea, but there are others who would guide you to go this way.

Best of luck.

dpezzo

I guess you never know until you ask. I am calling my credit card companies tomorrow with your suggestion braisler. Thanks for the excellent tip...

screamincheetah

DO NOT USE A CREDIT COUNSELING SEVICE!! These always seem like a good idea at the time, but they really kill your credit. To a lender, it basically looked at the same as bankruptcy. Braisler had some good thoughts for sure. Try calling the companies direct. I own a mortgage brokerage, so I know the value of looking that direction. If you just bought your house 6 months ago and you got a 100% loan, then there might not be a lot of options yet. If you put any money down though, you certainly have options, and there'd be no better way to clean you credit up and get rid of those payments then to do it with a mortgage. There are also companies that will lend you over 100% of your house, but I would only suggest those if your only other option is bankruptcy, and if you're planning on staying in the home for long while longer. You can IM me if you want to talk further about things.