Your Questions About How To Pay Off Debt

Paul asks…

How long does it take to pay off debt from college and med school?

I’m just curious as when I told my parents i wanted to become a neurosurgeon, they said they when i finally am one, i’d be paying my butt of with debt. On average, how much is college and med school debt, and how long does it usually take to completely pay it off?

richmama answers:

Well it varies, but you can expect to pay anywhere from 100-350k. But you have to remember (depending on your area of specialism) that Doctor’s have high salaries. You can expect a 6 figure start off salary (when you finally qualify as a fully fledged neurosurgeon, which takes a fair long while). You’d have your loan paid off fairly quickly. But they don’t expect you to pay ALL of it as soon as you get a job, so don’t worry. With experience comes more money, and some neurosurgeon’s make millions of dollars a year.

Lisa asks…

How do I pay off debt if I don’t even know what it is?

I have debt that shows up on my credit report, from medical bills and various things, but I have no idea where to pay it, where its from, or how to get that information.
I want to pay off my debts, how do I find out what they are and who to pay?
My credit report is 550 or something, I just want to make my credit better!

richmama answers:

Information about your debts should be on your credit report. Go to and order it for free.

If the phone number and/or address is not listed, send a dispute letter to the credit bureau and demand an investigation. When the report comes back, if it still doesn’t have the info, ask the credit bureau to give you the “means of investigation”. This will show who the bureau contacted to verify the debt.

Susan asks…

I am getting ready to refinance and I heard that I can take some money out to pay off debt How does this work?

In other words, If my loan is 250,000 and I want to refinance and lets say my house appraises for 300,000. Does that mean I have 50,000 I can use to pay off debt? Am I understanding this correctly?

richmama answers:

Basically what all the others said were accurate and true. You can get a 100% loan with the proper credit score and credit rating.

Before you mortgage your most important investment to the max, find out if it is necessary. I must say that if you are paying off credit cards this is probably the correct thing to do as the interest you pay on your mortgage is normally tax deductable.
Check with your cpa or tax preparer.

Add all the debts you want to pay off according to the balance of each debt. This will give you an idea of how much money you really need. Once you have added the debts up and found out the true amount of debt you want to pay off. Add the same debts only this time add up the monthly payments you are making on each debt.

Take the monthly balance you have added up and the balance on your mortgage this will give you some what of an idea about what loan amount you will be seeking. If, in addition to paying off the debts you want some cash in your hand add this amount to the debts and mortgage amount. You mgiht not need the entire amount of the $50,000. Just because the equity is there does not necessarily mean that you have to use it up. If paying off all your debt is beneficial by all means do so. If not leave the equity in your property, it is like money in the bank.

Take the monthly mortgage you pay each month as well as the monthly payments you are making on the debts you want to pay off this will give you some idea as to what you are paying presently each month.

Now you should contact a mortgage broker about securing a loan with the amount you have determined that you need. See if this person can run a credit report as well as give you an idea about the value of your property. Tell him what you want to pay off and if you want cash in your hand.

Once he has ran a cedit check he can tell you the type of loan program you are qualified for to include if you are able to get a 100% loan on your property.

Now there is another thing to consider. You know the loan amount you had in mind, now you have to find out the cost this loan will cost you. Again check with the mortagage broker, he will issue you a document called a HUD-1 or Good Faith Estimate as to the cost, debts you will be paying off to include the mortgage and the amount of money you will be getting in your hand if you requested any.

Now find the monthly payments for your new mortgage,find the piece of paper that you added your monthly payments up to include your monthy mortgage. Are you saving enough that this loan make sense? If you are saving in excess of $300 or more it might behoove you to accept the loan.

Once you have decided to take the loan your mortgaage broker will then require you to prove your income, with pay stubs and w-2, other documents will be needed so be prepared. It might seem as if it is a long drawn out procedure, but it will come to an end. The one important thing to remember is that even though you are paying off your debt, please continue to pay your debts as well as the mortgage. If you have a questions about paying consult your escrow closing officer or your mortgage broker.

It does you no good to pay off these high interest credit cards and other debts if you are gonna run them back up and not take this opportunity to save a portion of the money that you are paying off. Let’s say for the sake of a good argument that you are saving a total of $400.00 each month. I think you should take at least half of that savings and put it into some type of savings account, retirement account or some intrustment that will be beneficial to you later in life.

If you don’t take the measures to do this immediately and have it deducted from your check each month, in about 3 years you will be doing the refinance dance again. That is up to you and you have to make this decision, I can only give you my opinion, but I have seen it time and again,my same clients continue to do the same thing over each time, paying off debt followed by running it up again, thus the refinance dance.

I hope this has been of some use to you, good luck.


Jenny asks…

Is there a way to tell how much a credit score will go up when you pay off debt in collection?

Me and my husband are trying to get a mortgage but his credit is really bad. I have a 755 but alone do not make enough to qualify. He makes more money but has a 588 (I know, its bad). We are planning to pay off his debt in collections in hopes that will bring it up enough. Is there a way to tell if it will get high enough?

richmama answers:

Your credit score won’t jump dramatically. It will take time for it to go back up. The debt in collections will stay on your report for many years, it will be listed as paid; however, still looks bad and affects your score.

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