Ask The Get Out of Debt Experts Divorce

Went Through a Nasty Divorce and Need to Get My Finances in Order. – Cyndi

“Dear Steve,

I went through a very nasty divorce in 2010 and I had to pay my ex $57,000 to keep the house (albeit that he didn’t pay for the house or anything remotely suggesting that he owned part of it – gotta love the community property clauses)…Anyway, as a result of the divorce, I am stuck with nearly $40,000 in credit card debt. I am making the payments on each of the cards religiously but it’s frustrating because due to the interest rates it doesn’t appear that I’m making much progress (although I always pay more than the minimum). I own my home (value is about $250,000 and owe $98,000 on it). I’ve worked as an Independent Contractor for the same company for over 5 years, which is the problem I guess – the company can’t hire me as a direct employee unless I relocate to Colorado and the housing market right now doesn’t make it a good decision to sell and relocate at this point and time (and I’m not even sure I would want to). Because I’m self-employed, I’ve been told it will be difficult (to impossible) to get any type of loan consolidation. I’m VERY capable of making one monthly payment toward a consolidated debt of at least $1,000 per month but on paper apparently I don’t look that good. My credit score is over 700 but I’m not sure exactly what it’s at at this point and time (it was 750 before the divorce, but I imagine it’s gone down as a result of the debt and number of credit cards out there in my name). My net income is $3542 per month and my mortgage payment is $822.00/month – simple calculations show that I do have a good income and I have been employed consistently for years, but after reading your articles you’ve scared me to death with regard to using my bank (BofA) to try and get a loan consolidation loan…and I definitely do not want a variable rate. Do you know what options I have (if any)?

READ  Should I Consider Filing Bankruptcy After My Divorce?

Any help you can provide would be greatly appreciated, as I would like to get this debt under control and off of my back as soon as possible. Again, I wouldn’t have any problem making at least a $1,000 payment per month to a lender if I could get my credit cards all rolled up into a nice package.

I thank you in advance for your advise and assistance. Unfortunately, I don’t know anyone with any real knowledge when it comes to this stuff and I’m more confused now then when I started, after reading all the scams out there

Cyndi”

Dear Cyndi,

The self-employed issue can be difficult. I’ve seen people both approved and turned down for debt consolidation loans being self-employed. The hard part is the tax returns. Self-employed people often try to minimize their tax liabilities and that deflates their qualifying for a loan.

However, LendingClub.com and Prosper.com are two places to try. Both do make unsecured debt consolidation loans. See their sites for additional information on debt consolidation loans.

Another alternative that will not negatively impact your credit is to just get organized and smarter about paying down your debt. Try ReadyForZero.com and let the free automated program help to guide you. Sometimes these issues are best solved with structure and organization.

Check out all those options and then come back and let me know how you faired. If we need to take another step, we will.

Please post your responses and follow-up messages to me on this in the comments section below.

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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.

1 Comment

  • Cyndi,

    With the amount of equity you have in your home, you may want to consider refinancing and clearing out the cc’s.

    Using a basic mortgage calculator a $138,000, 15 yr loan at 4% would be about $1,020/mo for principal & interest.A 30 yr loan at 5% would be about 740/mo (p&i).

    If you can easily swing the payment on a 15 yr loan, go for it. Don’t be fooled by the lower monthly payment, you’ll save a ton by going with a 15 yr mortgage. In this case you would save an estimated $83k over the life of the loan, in addition to finishing 15 yrs earlier.

    Good Luck!

    Andy

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