' Will Debt Management Affect My Mortgage? - Law Offices of Robert M. Geller, P.A.

Will Debt Management Affect My Mortgage?

will debt management affect my mortgageDebt management is the process of consolidating all your debts into one monthly payment. This type of program is designed to help those who are struggling with debt. They make it easier to pay their bills on time and become debt-free.

But as positive as these programs might be, they aren’t perfect. It’s important to understand everything you can about debt management programs before deciding to participate in one.

Many homeowners who are considering debt management are concerned about how these programs impact their mortgage.

Will debt management affect your mortgage?

Here’s what you need to know.

Debt-to-Income Ratio

Your debt-to-income ratio (DTI) is a crucial factor in mortgage approval. DTI is calculated by dividing your monthly debt payment by your monthly income. Mortgage lenders use your DTI to determine if you can afford a mortgage.

When you enroll in a debt management program, your monthly payment is reduced, which can lower your DTI. A lower DTI can increase your chances of getting a mortgage approval. This is a positive thing for people hoping to get approval of a mortgage, but does little to affect those who already have one.

Credit Score

Your credit score is another critical factor in the mortgage approval process. If you’re interested in buying a home, it’s important to do all you can to boost your credit score.

Unfortunately, participation in a debt management program can hurt your credit score initially. When you enroll in the program, the debt management company negotiates with your creditors to reduce your interest rates, payments, and fees. These negotiations can have a temporary impact on your credit score.

However, over time, your credit score can improve when you make regular on-time payments. If you’re struggling with debt, your best bet could be to enroll in a debt management program and put your homeownership dreams on hold for the time being. Consider the big picture, even if it means you need to wait.

Payment History

Your payment history is also an essential factor in obtaining a mortgage. A debt management program helps you make regular payments to your creditors which can improve your payment history. Making on-time payments is crucial in improving your credit score and getting a mortgage approval.

Make sure you understand how payments are reported to the credit bureaus when working with a debt management program. You’ll want to ensure that the payments you make toward your debt benefit you when it comes to credit, in addition to helping you pay down your debt.

Debt-to-Credit Ratio

Your debt-to-credit ratio is the amount of credit you are using compared to the amount of credit you have available. A high debt-to-credit ratio can lower your credit score. When you enroll in a debt management program, you pay off your debt, which can lower your debt-to-credit ratio. A lower ratio can improve your credit score, increasing your chances of getting a mortgage.

Down Payment

The down payment is the amount of money you pay upfront when you buy a home. When you’re struggling financially, it can be difficult to accumulate a significant down payment. Enrolling in a debt management program can help you save money, making it easier to accumulate a down payment.

Participating in a debt management program can benefit someone struggling with debt, but these programs aren’t right for everyone. It’s important to understand your options and determine which will be most beneficial for you, especially if you have a mortgage or you intend to buy a home soon.

For more information about debt management programs or to discuss your financial situation in general, contact the Law Offices of Robert M. Geller at 813-254-5696 to schedule a free consultation with an experienced attorney.


Video Testimonials

Tampa Bankruptcy Law Blog

Can a Bankruptcy Discharge Be Revoked?

Filing for bankruptcy is a difficult decision that can have a significant impact on your finances and future. Fortunately, bankruptcy...
Read More

How is Marital Debt Divided?

Filing for bankruptcy is a complex process and becomes even more complicated when marital debt is involved. Marital debt refers...
Read More

What is Skip Tracing in Debt Collection?

When you lend money to someone whether it is for personal or business reasons, it’s especially difficult when they don’t...
Read More

What Happens at the End of a Chapter 13 Bankruptcy?

Dealing with bankruptcy is never easy. However, if you find yourself in a situation where you need to file for...
Read More

Can My Wages Be Garnished for My Spouse’s Debt?

Marriage is a partnership that often extends to financial issues, including debt. Unfortunately, not all spouses see eye to eye...
Read More

What Happens When You Get a Court Summons for Debt?

Getting a court summons for debt can be an overwhelming and frightening experience, but it doesn't have to be. Despite...
Read More

Can a Debt Collector Serve You Papers at Work?

Debt can feel overwhelming and stressful, especially if you have creditors calling you at work. Many people wonder whether this...
Read More

What to Do If a Debt Collector Threatens You?

Dealing with debt collectors is stressful and challenging. Even under the best of circumstances, contact from a debt collector is...
Read More

What You Need to Know about Updates to Student Loan Bankruptcy Discharge Laws

Are you struggling to make ends meet because of hefty student loan debt? The good news is that you may...
Read More

What is Considered Harassment from a Debt Collector?

Being in debt is never easy, but it’s especially devastating when you're being harassed by debt collectors. Of course, debt...
Read More


For The Next 5 Days GET A FREE BOOK About Bankruptcy

Learn More


We are A Debt Relief Agency.
We help people file for bankruptcy under the Bankruptcy Code

Pay Online Bankruptcy Courses Newsletter Subscription

Call For A Free Initial Consultation


Tampa Office

Law Offices of Robert M. Geller, P.A.
807 West Azeele Street
Tampa, FL 33606
T: (813) 254-5696
T: (800) 853-7549
F: (813) 253-3405

Map And Directions

St. Petersburg Office

Law Offices of Robert M. Geller, P.A.
125 5th Street South
(Wells Fargo Financial Center)
2nd Floor, Suite G
St. Petersburg, FL 33701
T: (727) 532-3939

Map And Directions

Pasco Office

23526 State Road 54
Lutz, FL 33559
T: (813) 336-2320

Map And Directions