“Dear Steve,
Total credit card debt due to starting an unsuccessful business that was good for about a year and a half then crumbled with the economy.
Both lending club and prosper have denied me loans and my credit rating is 720. I am never late paying anything but am drowning in debt. I don’t know where to turn to get a debt consolidation loan, any other suggestions. Thank you.
Amy”
Dear Amy,
My guess is that even though your credit score is good, you are actually way over your head in debt and your debt to income ratio makes you too big of a risk.
Lending Club and Prosper are the most reasonable lenders I know who are willing to take a bit of risk, but not take a stupid amount of risk, for an unsecured debt consolidation loan.
You are unfortunately in the creditor sweet spot, judging by your credit score. You have been really good about paying your bills but now so far in debt there is little room and no extra money to dig yourself out.
I’ve seen this same situation in others who used their credit cards to help make ends meet and propped up their credit score temporarily by using the cards to cover expenses or make the payments to stay current. If that’s the case, these situations always implode without an infusion of new sustained income.
If that sounds familiar then we need to start thinking about the theory of dissaving and the reality of digging out of debt with a budget.
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Just based on the information you shared I would be willing to bet there is little room to increase your income and/or reduce your expenses to launch into an extended repayment plan.
In that case, if I’m right, then we need to start closely thinking about intervening with the debt and considering bankruptcy.
You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.
Bankruptcy is a responsible action to take in the face of no expectation of paying your way out of this.
If you are just living month-to-month or paycheck-to-paycheck I doubt you are properly saving for retirement now, when you need to do that most.
By clearing the decks of the unmanageable debt and focusing on doing better moving forward you can learn from what you’ve lived through and fix the future. That’s the most important thing to do at this point.
Please post your responses and follow-up messages to me on this in the comments section below.
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