What are my options to reduce our debt?
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whatever wants to know:
My wife and I are $70,000 in debt from credit cards. We make great money but over the years things got a little out of hand. I just tried to get a personal loan for $50,000 and the bank said that our debt to income ratio is off and they will not loan us a dime. I pleaded my case that the reason I am applying for the loan is so that I can get my debt under control. I am thinking of debt consalidation but I do not want it to effect our credit. We need help!
My wife and I are $70,000 in debt from credit cards. We make great money but over the years things got a little out of hand. I just tried to get a personal loan for $50,000 and the bank said that our debt to income ratio is off and they will not loan us a dime. I pleaded my case that the reason I am applying for the loan is so that I can get my debt under control. I am thinking of debt consalidation but I do not want it to effect our credit. We need help!
Tagged with: Bank Debt • Personal Loan
Filed under: True Credit
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How anyone can get the far into debt is beyond comprehension. This is not a “little” out of hand. Sell everything you can and pay off as much as possible and then live in poverty until you owe nothing. Learn the difference in want and need.
I could go into a long post but will spare you and the others who answer. go to the library because ot is free and read Dave Ramsey’s book, The Total money Makeover and Financial Peace. Follow it. It works we were twice that much in debt and in 5 years are now debt free. It can be done.Don’t give up and don’t do a CONsolidation loan !
More then likely your credit score may have taken a hit because your debt load increased. Your score is based on several things but mainly on your monthly payments and your debt to income ratio. Many do not notice the debt to income impact until they’re pretty deep into debt and their score drops and are not approved for a loan due to that reason.
Other than bankruptcy, these are the other two main options for debt relief
1)Consolidation/ CCS: Reducing your interest rate near 9-12% and minimum payment. You end up paying the full balance of your debt. The sponsor also take a monthly fee that does not pay your debt down but is for their services. They are non profit, but they still make money off of the monthly fee they charge each individual and additional fees they receive from creditors.
Consolidation into a Mortgage: Adding your unsecured debt to your mortgage.
2)Negotiating/Settlement: Negotiating your debt amount to a reduced pay off. If done right, it can actually help your credit since your debt to income ratio will decrease once the offers are paid off. You have to take precaution though when choosing a company to do this service as their are some who are not legit.
I used to work for a debt management firm for many years, but left after having my child. I am an experienced debt analyst and would not mind helping you find a solution. I believe that all debt options work, but it depends on the person’s situation to go with the right one fit to their needs. They each have their pros and cons so you should choose what’s tailored to your needs.
If you have any questions or want me to help analyze your situation to give you an un-bias answer, feel free to contact me at I can forward you my contact information from there.
It really sounds as if you and your wife are taking action and that is a very positive step to reducing your debt and becoming debt free. As for your debt to income ratio being too high, you may want to contact the bank and ask them what they consider as a good debt to income ratio and then you and your wife can work diligently to get your debt to this threshold so that you can then apply for a consolidation loan or you can try another bank altogether with different criteria.
Another options is to try peer-to-peer lending institutions, credit unions and even private lenders. To get a feel for your credit score, you can order a report from one (or all three ) of the reporting agencies so that you have a better idea of where you stand. Another option is a home equity line of credit. Many institutions offer better than average deals on these types of arrangements since they have collateral – the equity in your home. Sites like bankrate.com can give you a better idea of what to expect.
As for affecting your credit, applying for credit can cause a small decrease in your score but factors such as high debt-to-income ratios, late payments, missed payments, collection accounts, and other factors like that will affect it even more. So all in all, a debt consolidation loan or another lower interest loan may be the way to go even if it applying lowers your score a tiny bit. Just stay up to date with payments (make them on a timely basis) and try not to increase your debt to income ratio further with other loans. By doing this, you should be able to avoid any drastic credit score drops.
Do you understand why you are out of control?
You need a budget, and emergency fund, and. You have to sit down with Honey, and produce a plan, a budget, and a list of bills, smallest to biggest.
There are seven steps to getting back on track, and they are so logical……read the book.
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