Sep-17-2008
Are Personal Loans a Good idea to get out of debt?
We have credit card bills, & medical bills are huge it’s driving us crazy. Every month is a hassle to make a payment because we have to decide which bill is going to get paid. We can’t pay them all at once by the due dates; we don’t get paid enough!! I’ve been thinking of taking out a Personal Loan but I’m scared it wouldn’t be a smart move. Any Advice?
A personal loan will make things WORSE unless you end up filing for bankruptcy protection. You should consult a bankruptcy attorney.
If you are considering bankruptcy, a personal loan could be used to pay secured debts, then you have to wait at least 90 days to file for bankruptcy protection, and eliminate all of the non-secured debt such as medical bills, personal loans and credit card debt, but keep paying on your secured loans sucn as your house and car payments.
Yeah, don’t take out a loan to pay off other debt. Just order your bills by priority – house or rent first, then groceries, utilities, transportation, all your “bare necessities.” The credit cards and medical bills are important, and of course you’ll have to pay them; but they can’t take money from a turnip so to speak – if you don’t have the money they’ll just have to wait until you do.
Get on a written budget, and after all your necessities are paid for the month then start paying off your bills – pay off the smallest bill first, then the next biggest, then the next biggest and “snowball” it. It may take a while, but you can do it.
A personal loan will consolidate all of those bills with only one interest rate. So you have to look at what that rate would be and decide if it is better to only have one bill and clear it up that way.
Bankruptcy is never a good idea unless there are absolutely no other options.
Go to your bank and show them your outstanding balances and they can tell you whether it is a good idea or not.
Generally….NO!
You can not borrow your way out of debt.
Typical Scenario:
Person A has $5000 in credit card and other debt. They get a $5000 loan to zero out the debt. A few months later what do they have? A $5000 personal loan and $5000 in credit card debt again.
Bottom Line: If you have to much debt, you do not have a debt problem. You have a SPENDING problem.
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