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Pros and Cons Of Debt Relief Settlement In California

The applicant has admitted that he has not done a good job at managing his cash flow in a situation where his income can vary a great deal depending on what is going on in his industry. He is  a set designer in the TV and movie industry which goes through ebbs and flows much like many other industries.

He does have some savings and wants to know what the pros and cons are for debt settlement in California vs. using his savings to pay down his debt vs. refinancing his mortgage and consolidating his high interest debt. In most circumstances, finance experts would recommend that clients should refinance high interest debt, consolidate it and reduce the monthly payment to something that is much more manageable. The client would experience a better cash flow and they would pay less interest overall.

Debt settlement involves negotiating with your debt holders, in this case the credit card companies and arriving at a lower number that both parties agree to. The lender gets some money, while the borrower reduces how much they pay. The downside is that the borrower must still come up with a substantial sum of money to meet their end of the bargain and they still risk a hit to their credit rating when they take this action and if they cannot repay the amount that is finally agreed to.

In some situations using a company that specializes in debt settlement to negotiate on your behalf may also reduce the overall impact. We do not recommend that the applicant take all his savings and pay of his debts at this time, until he has found the next contract and is generating income once again. At that time he may reconsider his options in terms of refinancing and consolidating his debts based on his income at that time.


Home/Mortgage Loan Amount :: $389,000

Home Loan Application and Processing Speed (when do you need the funds):: this month if possible

Do you currently have a mortgage? :: yes, a large one and I would like to negotiate my way out of the additional credit card debt that I have built up

Bank Name and Branch ::Bank of America,  4th street

What City/Town, State and County do you live in? :: Santa Monica, California

Zip ::90401

What is your employment field? :: TV Programming

Employment Position :: Set Design

When are you paid? (monthly/weekly/biweekly)::Bi-weekly

Your credit rating to be – excellent, fair, or bad? :: bad

How did you find us? :: looking for some sort of debt relief settlement

How are you paid? (direct deposit/paper check):: direct deposit

Gross Amount Per Paycheck ::$3000

Do you agree to have this information published online, without your PRIVATE information of course? :: sure, at this point I do not have much to lose

Extra information here please (some detail):: I am desperately in need of some form of debt relief. My family and I live in the Santa Monica area of Los Angeles, California and have found ourselves in a very difficult situation due to a combination of over spending and recent loss of employment. I am looking for debt relief and considering applying for debt relief settlement. My wife and I are wondering what the pros and cons are associated with applying for debt relief.

The best solution for us at the moment would be to be approved for the mortgage that I have applied for on this application. This would allow us to consolidate all of the debt from our existing mortgage and our credit cards into one low interest, low monthly payment mortgage. We can manage this amount with our savings that we have for about a year while my wife and I look for jobs. We are pretty confident that we will find jobs since the ebb and flow of the movie industry is such that within a few months something will come along and we will all be back to work.

Note to Lender :: I work on a set design team and we are hired from contract to contract based on what TV series or movies are being developed. Sometimes they all happen at once and then we all go crazy for a few months or years. Then everything goes quiet and we are all out of work for a while. This is the situation now and I have been without a contract for about a month now.

You would think that I would plan for this sort of thing to manage cash flow and save for these leaner times. The problem for us at least is that we got used to the good times and lived the good life, charging up our credit cards and incurring far too much debt.

We do not know if we should just refinance our mortgage, apply for debt relief or take all of our savings and pay off the debt that we have. If we took the latter approach, it would leave us without funds for daily expenses which we do not think is the right approach. Can you help us understand the pros and cons of a debt relief settlement?


Category: Home Mortgage Loan APR 3.977% APR 4.26% APR 4.734%
Loan Principal $389,000 $389,000 $389,000
Payment Schedule Monthly Monthly Monthly
Length of Term 15 20 30
Amount to be paid $505,665.62 $555,395.64 $665,985.69
Total interest paid $116,665.62 $166,395.64 $276,985.69
Paid per installment $2,770.77 $2,282.45 $1,824.62
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  1. Bob wrote:

    I have 3 liens attached to a mortgage on a home in ky. these are because of medical bills we could not pay. They come to a total of $12,000. I am behind on the mortgage on this property by about $2500. About 1.5 years ago my wife and I moved here to Ohio after my mother-in-law passed away. My wife and I have not been able to get but minimum wage paying jobs. Because of the liens, my paycheck is being garnished, which decreases my pay even more. We do not have the funds to pay monthly bills. We have unpaid debt from when we lived in Ky. My wife and I are on several prescription meds. We struggle to afford these each month. We are about $3000 short in funds each month. I would like to receive a loan of $30000 for an 8 year period. We have not been the best money managers in the past, but want to pay off all debt and get a totally clean slate. We also have a mortgage on the house we are living in here in Ohio.This home was my mother-in-law’s home. With all unnecessary debt off the table, we can pay the loan payments timely and have everything on track. Thank you for all your help.

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