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Question: How or can i obtain a debt consolidation loan?

(Posted by: Daryl on 2009-02-21 17:30:48)

I have a large amount of credit card debt and very little in the way of security for a consolidation loan. I have spoken to a few lenders, one told me my best option was to go bankrupt, but I did not think this was wise because I'm comfortably paying the minimum amount every month, I'm just finding it hard to make serious inroads. The other offered me a loan that would mean I would be paying more to service that loan (per month) than if I did nothing and just payed all of my credit cards separately each month - so I did not see how this would help me and thought it was pretty stupid. Apart from asking the banks to lower my interest rate, what other options do I have, if any? Thanks

Posted by: Reena on 2009-02-21, 17:57:10

While you may be able to pay the minimum payment on your credit cards every month you are also never going to make those balances go down. Take the loan and wipe out the credit card debt or pay forever the minimum payments and never see the amount of debt go down. Your loan is for a fixed amount and a set time frame... but your credit card payments can be indefinitely when all you pay is the minimum payment every month.

Posted by: aogpro on 2009-02-21, 18:01:10

1-800CCD.com its the company 1-800-credit-card-debt I hope they can help you and best of luck in your debt consolidation

Posted by: lathom01 on 2009-02-21, 18:18:07

Keep shopping around. If you managed to find one bank that would work with you, it's possible you could find another.....with a better deal. I was going to suggest trying a consumer counseling agency, but you have to be behind on your bills by (I think) 3 months before you qualify for their help, and you evidently are not behind. Filing bankruptcy is never the best way to go since it will ruin you for the next 10 years. If you're keeping your payments up to date and you were able to find at least one bank willing to loan you money, I'm assuming that your credit is not very bad. If you file bankruptcy, it will be. Take all your credit card statements and look at how much of your monthly payment went towards paying the interest. It's broken down for you on the statement....just look under "interest ". Do that to all your statements, then add it all up. Would you still be paying more to service that bank loan than what you are currently paying per month in interest rates? If you DO go with the bank loan option, do not get caught in the joy of having lower monthly payments and getting complacent about it. Once you pay off the cards, get them out of your wallet so you cant charge them up so easily again. Then pay as much as you can each month towards the bank loan. If you have a hard month, you can just pay the minimum. Otherwise, pay as much as you comfortably can,,,,even if it means you're paying the same amount each month as you were on all your cards. Just remember, those were MINIMUM payments and did little to reduce your balance. If you pay more than the minimum on your bank loan, you'll have it paid off decades sooner than you ever would on those credit cards!!

Posted by: Elizabeth R on 2009-02-21, 21:43:05

Daryl, One: Don't file bankruptcy. The lender that told you this is a complete moron. Two: Sounds like you are caught up on your bills and are able to afford them. Kudos to you. In all seriousness, this is my suggestion. Do not consolidate your credit card balances into one loan. Are you really going to be diligent enough to not charge more on them or to open more accounts. Because if you do that, then you are going to find yourself in a much deeper hole than what you started with. You need to sit down with your bills and a notebook and write down tte balances and interest of each of them. Then, make a budget. Rent, car payment, insurance, weekly gas expenditures, groceries, utilities, etc. to see how much you will be able to pay on your debt each month. Pay off your lowest debt first, then when your pay that off, apply that payment to your next lowest debt. It's called the Snowball Effect (Dave Ramsey, Financial Peace). Example: You owe JCPenney $500, Sears $800, and Visa $1000. If you pay $50 a month to JCP and $30 to Sears, then when you pay JCP off, put that 50 bucks to your Sears balance making it a monthly payment of 80. It works, trust me. Also, go to your local library and check out Dave Ramsey's book on financial management. It is awesome! And you mentioned asking for a lower rate---that couldn't hurt. If you don't ask, you won't know. As for paying your debt, it is going to be hard work and you have to be diligent about it. If you can or need to, get a part-time evening or weekend job and put 100% of your earnings toward that debt. Good luck!

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