Quick Answer: A reader with $40,000 debt, 680-710 credit score, and $105,000 income was denied debt consolidation loans despite paying off previous Lending Club debt successfully. The advisor suggests his credit scores are surprisingly low for four years post-bankruptcy and recommends focusing on credit rebuilding rather than taking on additional loans.
Question:
Dear Steve,
I’m an avid faithful reader of your newsletter. Ok…….HELP !!!!!!! I am about $40,000 in debt. All I “think” I need is one ” loan” one “payment”. Problem , I can’t get just one loan when asking for an amount to cover this debt. Any suggestions , advice?
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.
In the past , I had an account with Lending Club no problems – paid in full. I figured I’ll apply but was denied.
The Daily Money Brief — Free, at 10 AM
Money you may be owed, scams to dodge, and the fine print decoded — the consumer money news that affects your wallet, every weekday.
My family and I live frugally no outlandish living. This debt is from the years after the bankruptcy just to “catch up” on day to day expenses ( I live around Los Angeles Ca). Thank you so much.. just trying to live again.
Bankruptcy Ch. 7 discharged 2012. Credit scores between 710 to 680 , no delinquent accounts or payments. Annual income around $105,000. Have accounts with interest rates between 14 % to 23% , some personal loans + ( one credit card ). No car payments , although one vehicle used to secure an loan. Renting an house.
Frank
Answer:
Dear Frank,
Well thank you for being an avid and faithful reader. I’m honored you asked me for help.
A few things jump out at me from what you shared.
With a bankruptcy about four years ago, your credit scores seem low. It feels as if you might not have made rebuilding your scores a priority. You might want to read Easily Rebuild Your Credit After Bankruptcy.
Since your bankruptcy it seems as if your income has not been able to keep up with the life demands or surprise obligations and credit has been used to help make ends meet. The vehicle used to secure a loan, screams that message to me. So that tells me that, for whatever reason, your life just doesn’t fit within your income. Something is going to have to change.
Probably the most important issue is you have a family and you live around Los Angeles. That is a very expensive area to live and while an income of $105,000 might go a long way in Akron, Ohio, it just won’t in L.A. In fact I know someone who just moved from a hole in the wall near L.A. to spend the same amount renting a 4,000 square foot home in Colorado.
It might be time to think of even moving. For example in Akron, the median household income is $45,000 and the monthly income spent on housing, utilities, and commuting was only 28.9%. – Source
I use Akron as an example and I don’t know what your skill set is but it is possible you can live a better life someplace else.
If you are looking for another place to get a loan, look at Prosper.com but I think with your current low scores it is still going to be tough.
If you insist on staying put, you might have to look at even a Chapter 13 bankruptcy to right the ship.
Look, nobody likes change. Moving is a radical life adjustment. But what we know for certain is you got a fresh start in bankruptcy and the combination of your life, maybe misfortune, and your income and not cutting it where you are now. You are either going to have to reduce expenses or increase income by looking for a higher paying job where you are now or moving to a less expensive area.
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.
Frank, I just answered your question. Steve