Is the End of the Housing Boom Creating More Credit Card Debt For You?

I read an article the other day about a young man who had bought eight houses or so during the housing boom. This was a time when everyone was in a frenzy to buy up properties with little to no money down and interest only mortgages. Well, to make a long story short, instead of making a quick and tidy profit on the homes, he now has a majority of them facing foreclosure and is $140,000 in credit card debt. He has now figured out what many have been forecasting for the last year or so—the housing boom is over, and many of us are now in serious debt because of it. Click Here to learn more about the housing slump

Many of us bought properties during the boom thinking we would pay interest only rates or adjustable rate mortgages because we could always turn around and sell them for more than we paid. Interest rates were low, and now that they are rising it is becoming increasingly difficult to pay the bills, plus a mortgage that has just doubled or tripled. So, now we see the conundrum, should we pay our credit card bills or our mortgage? Well, of course choosing the mortgage reassures that you will have a roof over your head, but that also leaves you with a lot of really nasty collection calls from creditors because of unpaid credit card debt, the threat of law suits hovering above your head, thoroughly ruined credit, and a general sense of unease.

Plus, with many forecasters predicting the imminent downturn of the economy as a result of the housing bust, the financial security of many could be at serious risk. So, what about the amount of credit card debt? Since the price of housing is depreciating, it is much more difficult (as well as extremely risky) to obtain more equity from homes to cover these debts. Filing bankruptcy could put your home at risk (you may be forced to sell it if you don’t meet certain requirements). Credit consolidation would only roll your debt into your mortgage or car payment, and the payments would still be very high.

On the other hand, the method of debt negotiation can drastically reduce your unsecured debts without jeopardizing your home or increasing your monthly payments. In fact, you could end up with 65 or 70 percent less debt, allowing you to pay your credit cards off quickly and giving you the ability to afford your higher mortgage payments. Click Here to learn more about ridding yourself of credit card debt.