Is There Any Hope For Me to Get Out of Debt? – Kenneth

Steve Rhode — Fri, 12 Feb 2010 18:47:20 +0000

Kenneth

“Dear Steve,

I changed jobs last year and had to take my 401k distibution because I had to pay off a loan that I had taken out on that 401K.They charged me the penalty and took taxes out, but I found out this year that I still owed a little over $3000 in additional taxes. The new job layed me off in December 2008 due to no fault of mine (auto dealership) and I was unable to find another job till May of 2009. Needless to say what little savings I had disappered quickly and I had to borrow money to live on. I filed bankruptcy in 2007 while getting a divorce. Although I now have a job I have a backlog of debt from being out of work, most importantly child support that my kids need!

Is there any hope for me? I have checked into loans to try to get some of my bills paid but the places have ridicoulous interest rates (some over 200 %). I don’t have any assets to put up for collateral and most traditional lenders see me as a bad risk because of the bankruptcy, short time on the job, short time at my residence (had to move to find work), credit score (around 650 FICO), etc. Is there any lender you could recommend for my situation?

Thank you !!!!

Kenneth”

The Answer:

Dear Kenneth,

The lender that is most plausible and reasonable for people in your situation is LendingClub.com. This is a peer-to-peer lending network where small investors pool their money to make loans to individuals in situations just like yours. Check out LendingClub and let me know how your experience is. I think you will find the loan funded in a short period of time. There are few, if any fees associated with the loan. LendingClub.com has impressed me, but don’t tell them.

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!

@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

Searching For a Debt Consolidation Loan or Credit Card Counseling Service

Steve Rhode — Tue, 21 Oct 2008 01:19:49 +0000

From How to Get Out of Debt

When faced with credit card debt and suddenly looking for a credit card debt payoff it is not unusual for people to search out solutions they feel might be able to provide debt consolidation for bad credit.

See if this sounds familiar, you wake up, in the middle of the night, worried about your debt problems. You know that the credit card debt is out of control so what is the first solution that jumps into your mind, credit consolidation or credit counseling. It’s a natural knee jerk reaction but is it the right way to get credit card debt reduction?

The Debt Consolidation Credit Card Loan Scam

The reality is that unless you have a good local bank that appreciates your business and a load of equity in your property, you might find it very difficult to find a lender that will actually offer you debt consolidation for credit card debt.

When you are deep in debt that is the least likely time that a lender will want to provid debt elimination help. It’s always when you least need the debt consolidation loan that the lenders are jumping at the chance to consolidate your credit card debt.

Chances are significantly higher that will will be scammed, the target of a scam, or encouraged to pay a fee up from with the promise that if you pay the up-front debt consolidation fee that a loan for debt consolidation for credit cards will be waiting for you. I’m sorry to break the news to you but if it sounds too good to be true, then in the debt consolidation or credit consolidation world, it probably is.

The reason I mentioned the equity situation and helpful local bank is because the exception to the rule is that if you owe little on your home, a local bank may lend money to you for a credit card loan to allow you to consolidate your credit. Local banks these days have more flexibility than the larger banks do to make small loans for local community customers.

The tremendous amount of equity in your property will protect the lender in case you should default. Sadly, there is a chance that even with the credit card debt reduction that you could find yourself right back in the same situation again. I know, I know, you’re promising yourself right now that you won’t. That’s what most people say.

What happens after the debt consolidation loan provides a payoff of your credit card debt is that unless you are vigilant and very self-aware, in about six months the cards that you got the pay off on will find their way out of the drawer and back into the wallet. If that happens you’ll then have a debt consolidation loan for your credit card debt and a whole new crop of fresh credit card debt on top of the credit card consolidation loan. It’s not a good situation.

Other than contacting your local bank you can try this link for a mortgage loan or this one to refinance your mortgage.

The Credit Card Counseling Service Scam

You will hear a lot from companies that will offer some sort of credit counseling service. These companies may claim to offer Christian credit card debt solutions, be a for profit company that charges a fee, or proclaim to be a nonprofit credit counselling service with credit counselors just standing by to help you consolidate your debt. It does not really matter what flavor the credit counselors come in, you need to watch out for the same issue from each.

The non-profit credit counselors and those that say they offer Christian credit counseling often lead people to lower their guard and trust them more. That’s not such a smart thing to do.

Credit counselors who are offering a traditional debt management program don’t actually negotiate with your creditors to put together a repayment plan that best meets your needs. They will tell you the payment the creditor will accept and then ask you if you feel you can afford that amount.

Consumers who enroll in a credit consolidation program often think they will be getting a debt consolidation loan from the counseling service for their credit card debt. That’s not what happens.

The credit card counseling service does not pay off your debt, they simply act as an agency of convenience between you are your creditors. What actually happens in a credit counseling debt consolidation loan program is that you will make one payment each month to the credit counselling service and they will in turn cut it up into smaller payments and send a portion to your creditors.

There is it is, debt consolidation for your credit cards, when in fact your individual accounts remain with each of your credit card companies and the credit card counseling service is just taking your single payment you make each month, cutting it up and sending it off for you.

Credit counseling services often charge a fee for their service these days. The fact that they charge a fee is not necessarily a bad thing as long as you feel you are getting a good service for that money.

Not-for-profit credit counseling services are getting paid by your creditors based on how much money they collect from you. They skim off a “fee” for collecting the debt, send the rest to the creditor and the creditor will credit the entire amount to your account. This hides, from you, the fee the credit counseling group got.

In this way the creditor claims the fee they paid was a tax-deductible contribution, the credit counseling agency is paid a collection fee for service and you feel like you are getting a bargin by not having to pay a fee to the credit counseling agency.

There is no free lunch, remember that, please.

How to Get Out of Debt With the Get Out of Debt Guy » bad credit loan