• Have You Co Signed Anyone Else’s Loans?
While we would hope that you would automatically tell the truth to the debt consolidation counselors regarding all of your existing credit card debt accounts and other unsecured balances – considering that the underwriter approval of any debt consolidation loan would require a complete and wholly accurate disclosure on the state of your finances – we also understand that it’s not always easy to remember each and every financial liability, especially the loans you may have co-signed for friends and family. To be perfectly honest, many of these debts may not even show up on your credit report, and, if there’s never been any problems in the past, it’s just human nature to let the out of sight obligations flow out of mind.
Worsening the problem, there’s really no cut and dry ruling to formally dictate how mortgage underwriters should respond to continued activity upon a loan you’ve co signed, particularly one in which you do not appear to benefit from in any way. Consequently, it’s vital that the loan officers working for debt consolidation companies know about any dormant sticking points that could conceivably derail the process of funding down the line; it’s always easier to account for any troubling matters in the course of an application from the start rather than after a debt consolidation has been red flagged.
• Have You Scrutinized The Laws Of Your State
For those borrowers who are primarily considering the advantages of debt consolidation companies because they are worried about being subject to lawsuits brought on by the credit card conglomerates, you should first look at the regulations that your own state has enacted to make certain that you honestly have something to worry about. Around different parts of the United States, various local legislatures – worried about the effects of punitive measures upon honest citizens who’ve just fallen into poor purchasing habits or subject to similar strife – have decided not to accept the federal strictures which would allow as much as one quarter (or thirty times the minimum wage, as mandated) of the debtors’ wages to be garnished. Some of the states have greatly diminished the percentage of income to be legally garnished while others, such as Texas, have chosen to disallow the practice in total.
In these situations, if the borrower doesn’t have a bank account to be seized following a civil judgment filed for the purpose of reclaiming past debts, there’s simply nothing the courts could do to force compensation of the lenders, even though the loans will have been formally designated as owed. As such, in the majority of instances, the creditors simply won’t risk the price tag associated with any legal actions to even start the process of winning a judgment because of the minimal chance of monetary rewards. If you had been speaking with debt consolidation companies about paying off credit card debt because you’d been concerned with the potential for law suits, it’s vital that you first see whether or not there’s really any threat in the first place. After all, while most states have instituted homestead protections that won’t let unsecured creditors touch your residence, a debt consolidation loan taken out with your equity as collateral will by definition place your domicile in jeopardy of foreclosure.
Cole Collins is a freelance writer in the field of personal finance with a concentration on consumer debt relief. For more information on debt relief please visit http://www.totaldebtrelief.net