Credit Cards Key » CreditCardsKey » Bank Credit Cards » Taking out a loan to pay off debt?

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  #1 (permalink)
: Ok, I know that question probably sounds crazy. Create more debt to get out of debt? But hear me out lol

Ok, so my husband lost his job and just recently found another one but in the mean time we racked up some credit card debt and got behind in some bills :( I also have some school stuff that is due. So I suggested to my husband that we see about getting a small loan to pay off all the credit cards, get caught up on bills and pay my school. We would only need about four or five thousand. Then we would only have that monthly payment and not a bunch of payments. We would probably end up paying less interest in the long run too right? Can you get loans that small? Would I need to go to a bank or a financial place?

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  #2 (permalink)
: The problem you are going to have is that the loan will be a personal loan. Personal loans do not have collateral and so are tougher to get and usually carry higher interest rates. Since you have fallen behind on payments, that makes you a higher risk, meaning you are less likely to qualify for the unsecured loan. Your best bet is to make a concerted effort to pay back the credit card bills as fast as you can to help rebuild your credit.
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  #3 (permalink)
: You would need near perfect credit AND your hubby would need at least a year or two at his current job to even think about applying for a loan. With that said...banks stopped giving out micro personal loans about 25 years ago. Today those are credit cards. If you can't get a credit card for $5k to consolidate the debts....you wouldn't qualify for the loan anyways.
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  #4 (permalink)
: Nope, make an offer to the credit card companies, even if it is a groat a month, if they refuse the offer still pay what you offered each month.

They might send it to a debt collector but you can repeat the same offer to them and still pay what you can afford even if they refuse the offer.

It is not in their interests to take you to court if you have made an offer of paying and you are honouring that offer whether they accept it or not, because the court would be on your side.

Just don't ignore it, but don't rob Peter to pay Paul.
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  #5 (permalink)
: Problem with taking out a big loan to pay off credit cards is that folks tend to run the credit cards back up. Then you have the big loan payment and the credit cards.

You also may run into problems finding a personal loan, especially one with a better interest rate. A credit union would likely be your best bet. Stay far away from companies advertising consolidation. They tend to not be the best choice.

If you are disciplined enough to not run up the cards, then shifting the debt to a lower interest rate might make sense. However, don't stretch out the loan term to make a small payment. Even with a much lower interest rate, the dollars add up when you tack on extra years.

For the life of me, I will never understand why people think only having one monthly payment instead of a "bunch of payments". Seems having a bunch of smaller payments instead of one big one would be much easier to budget per payday.
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  #6 (permalink)
: If you are or were in default the past 24 months, no bank or finance would approve you for a loan unless you have collateral to back it up. Perhaps you could get help from a family member and pay them back over time.
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