Hi Everyone. This is my first post but I have read many on here. As my name implies, I have analysis paralysis in that at this point I may have over read all the info out there and am not sure what to do. In the meantime debt is rising and things are getting tighter.
My situation is this.
I live in California. I have some income property that so far is not underwater. I've tried to do a refi on a building with equity to get a better rate and lower payment with a cash out due to high cc debt - $87,000. No chance. My income has fallen (self-employed) so my debt to income ratio is too high. I've been able to remain current all this time with my credit cards except for last month...I have one chase card where I'm within the 30-60 day period before it gets reported to the credit reporting agencies unless I pay. The interest on it is obscene.
I have never been late with the mortgages. Currently B of A has cleared me for an in-house loan modification but I really don't have any faith in that considering what I've read here. The new loan amount would be MORE than I am paying now so in the short-term it wouldn't work with my cash flow issues. In the long-term when the market picks up, I'm making more and there is no more principal being added to the loan it would.
I'm looking into selling one of my properties (mentioned above) that has an 8% neg am loan on it. If I did I may break even with it after taxes and realtor commission. If there is any money in hand after the sale I could either pay off what I owe, or negotiate with the credit card companies since I'll then have some cash to do a settlement. Hard to say what and if any money would remain.
Another settlement option is a law firm here in town that I went to speak with. They will settle my debt with their cash for 60% of face value and I will pay them back at 0% interest for a period of 3 or 3.5 years. I realize that they will probably settle it for 50% and pocket the rest as profit since there is no other fee. Thinking that since I have no cash on hand that by using their services the settlement part will go faster, even though I'll be paying them for a while afterwards.
My concerns are:
Being sued. Since I do have some assets - equity in the properties I own, will that make me a more likely target?
Would they be less willing to settle?
If I settle how long will this have a negative impact on my credit score. I plan on keeping most of what I have and one day want to get another loan. Also would like to start a business in the next year and a half.
Is a DMP a better option with quicker recovery for a credit score? Not sure if I can swing it but may want to try. Looking for the least harmful way to resolve all this with the options I have.
I have been reading about others who for instance stopped paying their chase cc and were able to negotiate a 0% interest/ 5 year payment plan. How would this look on a credit report? Anyone know?
Thanks for reading. I'm a 45 year guy with a 15 month old. I have to do what's best for him and his future.
Any advice or personal stories with insight would be appreciated!