Helping My Parents Get Debt Free

fatbelly

danedin wrote: »

Wouldn't any agreement with creditors, or defaulting on credit agreements mean that the equity in the property would be taken into account?

No, but it's definitely best not to highlight it. Charging Orders shouldn't come into play here as (from the info we're being given) the debtors can afford to clear the debts in a reasonable period, probably without defaulting.

After all, they don't have a mortgage to pay now.

Verbatim

Although the interest rate on a mortgage would be lower it's a bad move because
1) You pay for the entire term which will work out at much more overall
2) You are turning unsecured debt into debt secured on the house so it could be repossessed if illness or changes of circumstances meant you couldn't pay.
3) If you're tied in it will cost to get out/ change the mortgage, and if you're not tied in mortgage rates are likely to rise within the next year or so. The historically low rate now and even the 5% of recent times are much less than the rates over the last 30 years.
4) If they snowball the cc's they could pay them down in the most effective way. take the one with the highest interest rate and pay every spare penny ton that one and just minimums to all the others. Once the first is gone target the next highest interest rate and so on until they're all gone. This will mean the smallest amount of interest possible is paid so the debt is paid in the fastest possible way.
Also it may be possible to transfer balances to lower rates or to apply for 0% cards once they've reduced their debts a bit and they look like a better risk. Once they have cleared a card they could also ask that card provider if they can offer a deal for a transfer.

danedin

Thanks for all the advice so far, things are becoming clearer. It looks like it will be a good idea to snowball.