Quick Answer: Pawn shop loans provide quick cash but create a cycle of debt that worsens financial situations. For someone with $21,000 in credit card debt facing loan denials, Chapter 7 bankruptcy offers faster debt elimination and credit recovery than continuing to pawn items or pursue debt management plans.
Question:
Dear Steve,
Credit card debts and past due bills need a loan 21000 dollars seeking second job credit cards have lower my credit score. Trying to make arrangements with the credit card company. I need some money now. I got denied for a loan. My second job search is slow.
Every weekday I read the enforcement actions, filings and fine print the outlets skip, and turn them into the one or two moves that actually improve your position — a rate worth moving for, a fee you can refuse, a deadline to beat before it costs you.
In the latest issue (Sep 11): You drive to the dealership to pick up the car. There is no car. There was never a car.
I write Your Money Actually most weekdays — actionable money information you will not find anywhere else, and the small decisions that compound. It is free, I sell nothing, and I take no money from any company I write about.
I need a friend to help me. Time is running out. Sold some items and pawned some while still searching for second job.
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Gail
Answer:
Dear Gail,
I certainly hope you find that second job soon. But don’t the answer might not be to keep selling things and pawning items. That just rides a slow train to the bottom.
Quite possibly the reason a legitimate lender won’t give you a loan is that you are a big credit risk in your current situation. The hardest time to borrow money is when you need it out of desperation.
Your major options for dealing with problem debt are:
- increase your income, which you are trying to do.
- reduce your expenses, which it sounds like you have already done.
- eliminate your debt, typically with bankruptcy.
You should find a great local bankruptcy attorney and discuss eliminating your medical bills and other debt in a Chapter 7 bankruptcy. That is the least expensive way out of debt in the shortest period of time. It will also allow you to rebound faster and rebuild a solid future financial foundation.
If your instant reaction to this advice is bankruptcy is a last resort and will ruin your credit, then read this and this.
Dealing With Debt? Understanding your options is the first step. See how all your debt relief options compare — including ones most sites won’t tell you about. The Find Your Path quiz gives a recommendation based on your actual numbers, and the Scam-O-Meter checks any company’s complaint history before you sign. Federal Reserve research shows bankruptcy filers recover faster than those who don’t file.
Question asked.