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Advice Team Responses
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Loans: Consolidation Loans |
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More Advice Team |
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I am in a mess. I have a lot of outstanding credit card bills and other bills that are way behind. With being a student and not really having a good job now I don't think I will ever be able to get caught up, pay my rent and car insurance without someone coming after me. I recently applied for a $3,200 loan. That should cover everything.
I want to just pay off everything and start fresh with one bill to repay. I know my credit is bad, so what can I do to convince them that I will pay them on time? I can't sleep at night and I have been making myself sick with worry! -Brandi
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Brandi,
Things may seem overwhelming right now, but all you really need is a plan.
I highly recommend visiting with a trained MMI credit counselor. One option they might suggest is to institute a debt management plan. On this plan, MMI renegotiates the terms of your debts with your creditors. Many creditors work with MMI clients by lowering or eliminating interest rates, forgiving late fees and over-the-limit charges, or taking smaller payments. On this plan, you would make one monthly deposit to MMI that is disbursed to your creditors. You know exactly what to pay and when to pay. And most importantly, you know when you’ll be debt free!
I’ll bet you’re breathing easier already. For more information, visit the section on debt repayment.
Best Wishes,
The Advice Team |
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I was in two car accidents and I'm waiting for settlements to come in that should be of good size. I am not working at this time and have got myself in debt with my credit cards. I need a loan but I don't believe I can get one at this time because of not being able to work until the doctor releases me. I do have an attorney working on both accident cases because I do have some permanent damage. Is there any way I can get a loan that I can pay back when my settlements come in. Thanks -Dawn |
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Dear Dawn,
Unfortunately, it is unlikely that you will be able to obtain a loan without any source of income. My advice would be to contact your creditors and let them know your situation. Most creditors are quite willing to work with consumers if they feel that they are making a “good faith effort” to pay. Communicating with them before they have to communicate with you will go a long way.
While waiting for your settlements, you may also want to consider seeking assistance. Contact your local United Way to investigate what resources (unemployment, food programs, etc.) may be available to you.
Good Luck,
The Advice Team |
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My fiancee and I recently graduated college and are now planning our wedding. We have a lot of credit card debt from school and the payments are killing us. We can't seem to get ahead. I have been considering consolidating our credit cards and bringing down our interest rate.
Am I on the right track? -Chad |
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Chad,
The first hurdle will be to qualify for the loan. Your ability to get a consolidation loan will depend on your basic qualifications (i.e.: income, credit history, etc.), the amount of money you are trying to borrow and the collateral you have to put up to guarantee repayment of the loan. If you have the three primary qualifications which are, the ability to repay the loan, the credit background to verify your repayment record and the necessary collateral to guarantee repayment, you should get the loan.
If you do qualify, you may be able to obtain a "good" interest rate and the interest may be tax-deductible (for a home equity loan). However, you also need to consider the length of time it will take you to repay. To understand the true cost of credit, figure out what you will be paying over the life of the loan, rather than just looking at the monthly payment. Be sure to factor in any closing costs. You will also want to consider such things as the length of time you plan to be in your home and the marketability of you home if you had to sell. Also, before you proceed with a home equity loan, please be aware that you would be trading unsecured debt for secured debt. This means that if you are unable to make your loan payment, you could lose your home.
Warning! If you do choose a consolidation loan, be sure to close all your existing accounts. Too often, the zero balances are too tempting and the consumer ends up twice as in debt as when they started.
Congratulations on your upcoming nuptials,
The Advice Team |
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My wife and I are wanting to get a consolidation loan for about $25,000 for credit card debt. We do not own a house, so how can we manage to get a loan for that amount? -Ian |
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Ian,
Unfortunately, you might have a difficult time getting a $25,000 loan without adequate collateral. Creditors are not in the habit of making loans of that size without having the borrower put up some asset to guarantee repayment.
As an alternative, you can call MMI to explore the possibility of enrolling in a Debt Management Program (DMP). The DMP works similarly to a consolidation loan in that you make only one payment each month. You agree to deposit funds with MMI each month which MMI will then disburse to your creditors until you become debt free. Some creditors also agree to make adjustments on their finance charges and/or other fees for clients on a DMP.
To talk with a trained credit counselor, call 800-388-2227. Counselors are available 24 hours a day, 7 days a week.
Good luck,
The Advice Team
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