How to Stop Foreclosures & Consolidate Debt Solutions

A debt consolidation loan can help you avoid housing foreclosure.

More than 315,000 U.S. properties received foreclosure filings in January 2010, according to online foreclosure site ReatyTrac.com. According to the company, one in every 409 U.S. housing units received one of these filings during the month. If you are worried that you can no longer afford to pay your monthly mortgage loan, it might be time to consider a debt consolidation loan. These loans will consolidate your monthly debt obligations, including your mortgage payment, into one payment. You can then pay back your creditors and your mortgage lender without the threat of losing your valuable assets or facing calls from collection agencies.

Difficulty:

Challenging

Instructions

Things You'll Need

• Copy of your current mortgage loan statement
• Copies of your credit card bills
• Copies of your other loan statements, including student, personal or auto

1. Gather the most recent statements from your creditors. These papers include your most recent mortgage loan statement, credit card bills and other loan statements, including those for home, student or personal loans. Make copies of these papers.

2. Search for a reputable debt consolidation company. It's best to find these companies through the recommendation of a friend or family member. If you must search online or through the telephone directory for a debt consolidation company, make sure to research the company through your local office of the Better Business Bureau. Don't work with any debt consolidation company that has a high number of complaints.

3. Ask whatever debt consolidation company with which you decide to work to put in writing the exact fees and interest rates it will charge you for a debt consolidation loan. This will help you to avoid any surprises once your payments come due.

4. Send your debt consolidation lender the copies of your financial paperwork that you made in Step 1. The company will review these papers to determine the extent of your debt. It will then propose a debt consolidation loan that compresses these debts into one monthly payment. Before agreeing to the loan, make sure that you can afford the monthly payment.

5. Make your payments on time, every month. If you default on this loan, you could face the potential of losing your home to foreclosure.

Tips & Warnings

• Taking out a debt consolidation loan is not without consequences. These loans usually come with high interest rates. They will also lower your credit score. This is why many financial analysts say to use these loans only as a last resort.

References

• RealtyTrac: U.S. foreclosure activity decreases 10 percent in January
• Bankrate: Debt consolidation: cure or continued credit problems?: Jenny McCune
• Quicken Loans: Debt Consolidation Calculator