There are a variety of options available to help pay off your debt. Each one has its positives and negatives. The most common way for home owners to eliminate there credit card debt is to refinance their mortgage and roll all the debt into one payment. However if you have little to no equity in your home there are still ways to get out of debt.In addition to over equity products (125% Mortgages) you may qualify for a 100% Option Mortgage. These programs have a minimum payment option that can free up substantial cash flow and savings. You can then use that cash towards paying off other bills.
If you are so far in debt that making your payments is becoming a hardship you may want to look into bankruptcy or credit counseling. Bankruptcy can eliminate your debt if you qualify for a chapter 7. If you qualify for a chapter 13 bankruptcy then you will be put on a repayment schedule. Consumer credit counseling is a little riskier then filing bankruptcy. Credit counseling companies will try to negotiate with your creditors on your behalf to try and get you reduced payments, lower interest rates and sometimes smaller balances. Although most companies will charge for this service there is no guarantee of its success.
Another option to paying off debt would be a unsecured personal loan. Although the maximum dollar amount a bank will lend you is generally under 10,000 and have interest rates that are only slightly lower then credit cards they can still help pay off credit cards faster.
Paying off your debt is only the beginning. you need to realize what caused the debt in the first place. Statistically speaking, most people have large sums of credit card due to some unforseen incident. Whether it was a medical problem, loss of job, divorce, etc. the important thing is to make sure that the problem has been solved. I would also recommend starting an emergency fund of 3 months salary. That way if another unforseen problem occurs, you won't have to resort back to credit cards.
One option you may want to explore is a 125% home equity loan. In these loans you are able to borrow up to 125% of the value of your home. Most programs will require excellent credit and mortgage payment history. Most times you will also be limited to the actual cash out you can take, this amount will vary by lender so ask your mortgage broker to assist you in finding the right program.
Another option to paying down debt with no equity would be zero percent credit cards. They do offer a great no interest loan, but often it is only for a short period of time. Normally 6-12 month. If you miss a payment with one of these cards you generally will change to a default rate in the range of 24%. While they may seem like a good idea zero percent credit cards do have some drawbacks for the equity challenged home owner.
The minimum payment option can also be combined with a 40 year term for minimum payments as low as $250/month for every $100,000 borrowed.
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