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My husband is self-employed and I’m not working. So far we’ve been able to pay our bills, but he only has a week left with the company he has been sub-contracting for. I have $40,000 in a 401k which is our only savings left. We have $55,000 in combined credit card debt. My mortgage is a neg am fixed at 6.50 with 2 years left, but I can only afford to make min payment, so $20,000 has been added to the original principal balance of $500,000. We won’t qualify on a full doc loan to refinance. I have a free and clear rental in Nevada, but would take too much money to fix up and sell and would rather wait until market is better. How do I reduce credit card debt and modify my mtg if we aren’t late and can’t qualify?

I am not sure why you do not think you can qualify for debt settlement or even a possible mortgage modification. As part of the debt settlement process, you will fall behind and stop paying your credit card bills as you save up the money so debt negotiations can begin. This is the reason why credit scores get badly damaged during debt settlement, because it requires you to stop paying your bills. It is the cost of paying back less than you owe but it may get you out of debt if your options are few given your income situation.

Getting a home loan modification is also a negotiation process and something you can look into seperately from the credit card settlement process. As you mention it may not be possible but remember, banks are so overwhelmed by foreclosures that many are more willing to help you remain in your home if at all possible.

My suggestion to you is to learn as much as you can about your options on this site and others. Then talk to a few debt relief companies to get a better sense of what they offer. Make sure you understand (and discuss with them) both the benefits and drawbacks to their programs as there is no free lunch in getting out of debt. Anyone that doesn’t discuss the drawbacks with you is a red flag in my opinion.