Is Home-Loan Modification the Right Step?

Posted by Andrew Lipsitz

Q I am a business owner, and due to economic downturn our business receipts are down by almost 40 percent. I've been using my credit card to help keep the business afloat, and my credit-card debt has gone very high.I am starting to have difficulty paying my home mortgage each month. I have contacted consumer credit-counseling services, and they are working on helping me with a credit-card-repayment plan. They also suggested I apply for a home-loan modification.Am I taking the right steps, or are there some other alternatives I should consider? Also, how will my credit rating be affected by these moves?A If you have maxed out your credit cards and are having trouble making your mortgage payments, you need help in figuring out how to get these amounts in line with your income.As difficult as it might be, a properly designed and administered debt-management plan is a good way to go. If you need a debt-management plan, your credit history and credit score have likely already suffered either because your debt-to-credit limits are out of whack or because you have started to pay some of your bills late.Joining a debt-management plan shouldn't affect your credit negatively, and as you start making your payments on time and in full through the plan, your credit history and credit score should improve, as you feel more in control of your debt.

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