Get Out of Debt Guy

I Lost My Home to Foreclosure Last Year

Posted June 3, 2013

WRAL Reader Question

Dear Steve,

Last year I lost my home due to foreclosure. I had a second mortgage on the home with a finance company. I also have a personal loan with them. The interest rate is very high on both loans and I owe about $22,000. I pay every month but the balance seem to stay the same.

Do you have any suggestions on how I can get on the right track to pay down the balances?

Rhonda

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Answer

Dear Rhonda,

It's hard to judge exactly what is going on here with the limited information provided.

It appears you are not struggling financially but objecting to the interest rate being charged or the lack of progress you are making in paying down the debt.

If the issue is primarily about your lack of progress then your logical options are to increase the amount of your payment to something you can afford on a continued basis or refinance the debt with a new lender at a better interest rate.

The monthly payment determined by the lender is the minimum payment that meets the contractual terms of the agreement with the lender. It is not designed to get you out of debt quickly but to meet the lenders desire to balance maximizing profit and minimizing risk.

But maybe the issue is you are struggling to make the payment. If that is the case and you find yourself so tight financially you are unable to save money and build your retirement accounts then please read The Get Out of Debt Guy 8 Easy Steps to Eliminate Your Debt Checklist. That guide will walk you through evaluating your financial situation and determining so likely strategies to attack your debt.

Steve Rhode
WRAL Get Out of Debt Guy

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About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.