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Home > Ask The Get Out of Debt Experts > I’m a Police Officer and Don’t Know Where to Look for a Debt Consolidation Loan. – Mike

I’m a Police Officer and Don’t Know Where to Look for a Debt Consolidation Loan. – Mike

“Dear Steve,

Current situation is simple, for the first time in 14 years, we have fallen behind on our mortgage. Looking at our monthly numbers, my wife and I make decent money, bringing home around $6300/month. Our accumulated debt and other regular payments now total around $6600/month and that does not include basic living expenses like food and other necessities as they come up. We have outstanding debt totaling just under $99000, with minimal payments around $3200. That debt includes 2 vehicles, 2 personal loans, and 2 credit cards.

My wife has a Master’s degree and 10 yrs with the same employer, I will have my Master’s in two months and have been a police officer for 15 years. Within the past year, I lost outside employment opportunities that had produced around $15000 in additional income per year for the past 8 years. The loss of that income has hit us as we are trying to eliminate all of our debt.

Are there any lenders who will consolidate all of my debt, or even half of it? We have an excellent payment history, and even at a rate upwards of 15% on a loan to cover all of our debt, the payment over 5 years would be very manageable and would even allow extra funds to be saved or used for a quicker payoff. To me it makes good business sense to earn 12-15% interest on your money. Other than that, do you have any other advice for us? As my wife has said, we are not looking for a hand out, we are looking for a helping hand so that we can take care of our responsibilities.

Mike”

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The Answer

Dear Mike,

First off, that you for your public service. My hats off to you and all the crap you have to deal with.

The only unsecured debt consolidation loan I’ve seen really fund for people is from LendingClub.com. LendingClub.com is a peer-to-peer lending network and offers unsecured, fixed rate loans, for up to five year terms. The downside for you is that they only got up to $25,000.

Quite frankly I think we need to look at this from a broader perspective.

Let’s just say you have the equity in your home sufficient to pay off all the debt. By taking out a second mortgage or using your house as collateral you could easily lose the home if you could not make the payments. That just doesn’t seem like a smart approach.

I’m just going to bring this up and toss it out there. One legal option you always have is bankruptcy. Bankruptcy would discharge your debt or give you a monthly payment you can afford, prevent collection calls and block any lawsuits for the debt. Now bankruptcy may feel “out of bounds” but it is a legal process that give you the most consumer protections. You can click here to find a local bankruptcy attorney and get a free consultation to discuss your specific situation.

Would you be the first cop to go bankrupt? Hell no. I’ve helped many police officers in the exact same situation.

One guy in particular comes to mind.

The guy was just making it month-to-month. The situation had been going on for some time. It preoccupied his thoughts and he was worried and stressed. The stress was impacting his job and his ability to get needed sleep. He also found himself depressed as a result of the situation.

Now bear in mind all of these secondary issues were the direct result of the underlying money problem. He didn’t want to take action and really deal with the debt. He was hesitant. But one day he called me and told me he “woke right up” and realized today was the day to take action.

He told me how he had made a traffic stop earlier, and while his sleepy and depressed brain was stressing over the money troubles he didn’t even see the gun the driver had in his lap. He told me that while the driver didn’t point it at him but he realized the money troubles and all the impact they had in his life left him unable to do his job safely.

Now he didn’t go bankrupt. In his case he found a job with another department a few hundred miles away that was going to pay him a lot more so he elected to move the family and go for the better income to repay his debt faster.

In your case I am very concerned that with your budget as tight as it is, and no expectation of increasing your income, the situation may be too far gone for a loan to make a significant impact. You see even though you are at a stage where you want to dig yourself out of this debt hole, I need for you to have enough room in your budget to save money at the same time. You need a savings account or emergency fund to use in case of a surprise expense so you don’t have to run debt up again when something unexpected happens, and it will.

If the personal loans were for previous debt consolidation or previous debt payoff then I would lean more towards bankruptcy. Even if the LendingClub.com loan looks doable, I think you and your wife owe it to yourself to meet with a local bankruptcy attorney so you are fully informed about your options.

Think about it like this, doing a little recon before storming the house always make good sense. Just do some debt relief recon and talk to a bankruptcy attorney. And especially consider bankruptcy if the debt issue is bringing you down like in the story I shared with you.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

Im a Police Officer and Dont Know Where to Look for a Debt Consolidation Loan.   Mike
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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