Bad Credit Loan

iVillage Member
Registered: 11-21-2004
Bad Credit Loan
5
Sun, 03-27-2005 - 2:19pm
I am going out on a limb here but I am so very desperate. Does anyone know where I might possibly be able to qualify for a loan to pay off my outstanding credit card debt, even though I have bad credit? My credit is horrible and all of my accounts are in third party collections and are quite old. They have been there for about 1 year now. I have no clue what I am going to do about all of this. I am 22, full-time college student, work about 30 hr/wk and make $7.00/hr.(the going rate for a non-college degree job in this town) I was going to declare bk but I really, really, really don't want to do that. I have a co-signor on my car loan(which is current and almost paid off) and the woman in finacial aid told me that it would make getting a student loan more diffcult even though student loans aren't dischargable. Not to mention I don't think I have it in me to get up in front of a bucnch of people-who I know are in the same boat as I am- and declare bk. My friends and family are out of the question on helping me with this-neither one of them have much money at all. My total credit card debt is
$14,880. I am trying to land myself a full-time job to try to help things but the problem is I don't have lump sums of money laying around to settle with these creditors or to pay enough money to get caught up. I only made $8,000 last year alone. I have cut all living expenses to the bare minimum, I truely don't have anything of value to sell, and I have picked up cleaning a house every other week for some extra cash. I can't atke the calls, I am scared to death of getting sued, and even worse having my wages garnished. One of the creditors called my father's house a month ago which I know it is illegal and they have called me at my employment also. I cringe every time the phone rings at work when my boss is there. I know I need to send them something in writing certified mail and I am working on that. I checked into a CCCS called Momentives and the woman quoted me $378/month for their program but told me that is before they propose it to my creditors and since all of them are with outside collection agencies the monthly amount will probably go up. She said that sometimes the creditors force you into a corner where they basically make you file bk b/c you can't afford any of the other efforts you try to do. They bump the amount of money they want up and you can't afford it. I have no idea what to do and it is keeping me up at nights. I am sick of the phone calls at all times and the tremendous stress it is putting me under. Not to mention I am getting married in December. My fiance is giving me $300/month -which is all he can afford- to try and help me out. I have some money to work with on this but not a whole lot. If I could find somewhere to lend me the money to pay this stuff off and then I can successfully repay that. I guess at this point I am praying for a miracle. If anyone has any feedback on this that would be great!
Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
In reply to: mlb21
Sun, 03-27-2005 - 5:41pm

Any loan offered to you with all these accounts in collections would be pretatory lender loans.

All my best,
Danni

iVillage Member
Registered: 11-13-2004
In reply to: mlb21
Sun, 03-27-2005 - 6:18pm
This is a horrible position to be in for someone so young. I understand completely the fear and panic and have been there myself. Do not file bankruptcy. This should be an ABSOLUTE last resort. If you do, you will be in your 30's before your credit is cleaned up again. Take the $300/month along with whatever else you can send and pay this off on your own. No one will give you a loan to pay this off more than likely, and if they did, it would be at an extremely high interest rate. You are better off working out a payment plan with the collection agencies yourself. This is a hard lesson to learn and something you will never forget and this will hopefully make you less willing to go into debt later in life. if the accounts have been in collections for awhile, then the accounts I am sure are closed, and interest probably isn't accumulating anymore. Sit down with a pen and paper and list all of your debts from smallest amount to largest. Pay the most toward the smallest debt, but pay everyone something each month. When the first smallest amount is paid off, put that money on the next smallest. And so on, until it is paid off. Sounds like you will be out of school soon, and will hopefully be able to find a well paying job to help pay this off. Set up a budget and work from there until all this debt is behind you. Then take whatever money you were paying on your debt once it is paid and put it in a emergency fund. This should be 6-8 months of expenses. In the meantime, stay out of credit card debt now and in the future. You are young enough to start over and create a more solid future for yourself. Just don't give up, you can do this and need to for your future! Good luck to you!
iVillage Member
Registered: 02-06-2005
In reply to: mlb21
Mon, 03-28-2005 - 8:50am

Oh, sweetie, I've been where you are, and it is really tough!

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iVillage Member
Registered: 11-21-2004
In reply to: mlb21
Mon, 03-28-2005 - 4:56pm
Thank You for your advice. I have read Dave Ramsey's Total Money Makeover. And I just began his Financial Peace. I do want to do his plan but the only thing that I am concerned about is he said to "get current" if you are behind before you start the program. These accounts are about one year old. I don't think the collection agencies will work out payment plans with me but I am going to try. I went to daveramsey.com and tried to get in touch with one of his counselors by his phone counseling. But I had to leave a message b/c no one was there and I think there is a fee for the counseling. Thanks for the advice!!!
iVillage Member
Registered: 03-29-2005
In reply to: mlb21
Tue, 03-29-2005 - 8:54pm

I have been in your situation. I tried to negotiate with the creditors. They refused to accept anything that I could afford to send. I went to Consumer Credit Counseling - 3 different ones, in fact. I was told that they could not take my case unless I found a way to come up with an additional $700 a month - and this would be almost a 5 year commitment. I could not come up with the funds. Consumer Credit Counseling actually referred me to a bankruptcy attorney.

To reiterate what others have said, you will not be able to borrow your way out of this now. Any loan you could get would have an obscene interest rate which would not reduce your monthly payments. The only way other than bankruptcy that you are likely to get out of it is by using the methods in Jerold Mundis' How To Get Out of Debt and Stay Out of Debt Forever (the book commonly used in DA). Determine how much you can afford to spend on debt repayment, divide it up between your creditors and send it to them, period. The problem with this is that - even assuming that the debt is at a collections agency and is no longer incurring interest and penalites - it will take forever to pay off a $5000 debt at $10 a month, for example.

In my own case, I filed bankruptcy. It was embarrassing, but I got it over with and that was it. Yes, it will be on your record for 10 years. However, as it stands, you have several R9s that will be on your record for 7 years PAST THE DATE OF LAST ACTIVITY. This means that if you spend the next 5 years paying these off, they will still be on your credit record 12 years from now. Yes, it will eventually say you paid it off, but it will still be a R9 - written off as bad debt. If you declare bankruptcy now, you will honestly end up with a clean record faster than you will if you don't - unless you are able to pay it all off in less than 3 years.

Also, please keep in mind that the way things are going in Congress, you will not have the option to declare Chapter 7 if you don't do it very soon.

I do believe that bankruptcy is a last resort, but it sounds like you are pretty much there. Just my opinion.

Susan