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CGCPA
CGCPA , CPA
Category: Finance
Satisfied Customers: 3819
Experience:  40+ years experience in taxes and financial planning
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Hello... I am wondering if I sell my house and pay off my

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Hello... I am wondering if I sell my house and pay off my mortgage of 150K will that raise my credit score?
Submitted: 2 years ago.
Category: Finance
Expert:  CGCPA replied 2 years ago.

Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.

 

It will provide, at least, a short term credit score improvement. However, in the long run it can have a negative effect. I have no mortgage debt, use 3 credit cards and have a car loan. My score stays low because the percentage of my non mortgage debt to total debt is too high. Ridiculous? You bet! However, more important than a credit score is that you will be free of that obligation and, if you are prudent, you will be less vulnerable to the economics of our society.

Customer: replied 2 years ago.

I also have considerable credit card debt...never late on payment but always only minimum. I have recently gone through a divorce and unfortunately used my credit cards more than ever. I hope to regroup now with selling my house and downsizing to a condo. I am looking to purchase a condo for 30K, with 25% down...I am curious if my debt ratio will effect the approval for this new mortgage?

Expert:  CGCPA replied 2 years ago.
The 25% down payment should offset the high credit card debt. Additionally, paying the credit card debt off or even substantially down will have a major beneficial impact. Since you have always paid the cards on time and, hopefully, the mortgage you should have no difficulty getting the new mortgage loan.
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Customer: replied 2 years ago.

Hi again! I thought you were very helpful before,,, I sold my house (15k less than planned) I am still deep in credit card debt. I am paying approx $800.00 or more each month in minimum payments. The stress is really getting to me...I just need help to consolidate these debts...I've asked this question to others before and just get vague answers or too intellectual answers that I can't really understand. Can you please give me any idea of what to do or who to contact to get a loan or something...I am desperate...

Expert:  CGCPA replied 2 years ago.
Rather than incur new debt why not try calling the credit card companies and ask for an interest rate reduction. Most people do not know that this can be done. With an explanation many credit card companies are willing to do this since it will make it far more likely for them to get paid the full amount due even with a lower income from the credit extended to you. You may need to hone your negotiating skills a bit first so try one card first (the one with the lowest debt) and then analyze where you could have done better. You can always come back to me to help on this. Consolidating the debt with no rate reduction will not help since it will just be one creditor hassling you for more money. Another option is to get a part time second job and use this income to pay one card off at a time. One hint here is that you can make multiple payments each month. So, if the job pays weekly, pay a card every week starting with the one with the highest interest rate. Interest is compounded daily so weekly payments will reduce the debt faster.
Expert:  CGCPA replied 2 years ago.
Part of this process is developing a mindset of "i got myself into this mess and I can get myself out of it". That way you accept ownership of your issue and, over time, develop control of it. In the long run you will will not only be out of the problems but be better off for it since you will gain control over your life and avoid new debt that cannot be quickly resolved. It is a growth process and should be seen as a challenge rather than a headache. Remember that there are no "magic pills" to make this go away.
Customer: replied 2 years ago.

Before I rate your response , I just want to tell you how your words and advice have inspired me! Your suggestions sound like the BEST response I have EVER received from anyone on justanswer! Thank You Sincerely

Expert:  CGCPA replied 2 years ago.
You are quite welcome. It will not be an easy rad to travel but it will get better as you become more in charge of your own life.
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Customer: replied 2 years ago.

Happy New Year! Ok here is my next question...I have a small business for 10 years....just since my divorce (2years ago) have I gotten in this financial trouble. I've had to pay for all of my household expenses with no help from my ex husband. I finally sold my house and got rid of that debt...now I am trying to focus on getting my store back in financial shape. I'm wondering if I "sold" my store to my mother..to include all equipment and stock...would I then be able to file bankruptcy. If so is there a minimum amount I am allowed to "sell" it to her for? THANKS

Expert:  CGCPA replied 2 years ago.
If you sold the business to any related person, the bankruptcy court could see this as an attempt to hide your assets. They would then seize any funds you received from the sale, perhaps seize the business as well, and could even charge you and the other person criminally. If you sold it to an unrelated person the sale proceeds would be seized and you would not have the business. That would be just as bad for your future financial prospects. However, there is a Chapter 11 Bankruptcy which allows you to retain the business and pay creditors at a reduced rate. Perhaps you should look into that.
Customer: replied 2 years ago.

Well, I certainly don't want to do anything illegal...to read what you replied in black and white...sounds like a stupid question in the first place!! I should've known that already! What if I did bankruptcy for my personal debt...Will it affect my business or my new husband (2 months) ...I've been sole owner for almost 10 years. If I could get rid of my cc debt and a loan I still owe 30k on...I could bring my business back. Any advice I will welcome! Thanks!

Expert:  CGCPA replied 2 years ago.
A personal bankruptcy will only effect you, not any other person or entity. However, you own the business so you could be ordered to liquidate it to pay creditors. I recommend you see a bankruptcy attorney since, although I have some experience in the area I am not a bankruptcy attorney and this falls in their area of specialization.
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