I'm in debt.., What should I do? Options

[Jen]

I am about $8k in debt. My credit score is a 600 , and my income is so crappy.. that I don't even want to post it.

I was in more debt, but I have paid a lot of it off.

Should I get a consolidated loan, and put all of my bills into one?

I asked someone, and they said they could only give me a credit line of $2200, or something.

I'm just so confused.. and I just want to not worry about making 5 payments a month.

Does anyone have experience in this kind of thing, and could help me out?

I'm going to go to the bank sometime this week and see what I can do, but I'd like a little advice beforehand.

I am STRESSED to the MAX.

[GriffGirl]

A consolidation loan will kill your credit, plus, if you can't get enough of a loan to consolidate all of the debt, there's no point in the first place. Basically you'd need a personal loan for 8k, and personal loans are really hard to get for people with decent credit, much less for people with bad credit (myself included).

If it's really bad and you're absolutely drowning and chasing your tail, you might want to consider filing for bankruptcy. It's expensive to do though - if you go chapter 7 where all your debts are wiped out (except federal debts - taxes and student loans) you have to cough up the cash up front, you MUST use an attorney (not by law but there's so much paperwork involved you could really screw yourself if you don't) and it'll run you about 4 to 5 grand. You will also have to list all of your assets, and anything you have worth anything (CAR) will have to be liquidated.

You can file for Chapter 13, which is basically a repayment plan of all of your debts, but gets all your debtors off your a$s and halts any wage garnisments. You have to list your assets also, but you get to keep most of them (maybe not the vacation house in Malibu ) and your repayment is based on your income and lasts not less than 36 months and not more than 60. Typically you will need to come up with a retainer fee TBD by the attorney but will be at least $300, the cost of the court filing fee.

Chapter 7 stays on your credit for 10 years; 13 stays on for 7. It's my understanding that Chapter 13 is a little bit of a softer blow to the credit score, because you're actually repaying your debts rather than erasing them, and you can start rebuilding your credit after about 2 or so years into it as opposed to Chapter 7, which is essentially the kiss of death for a good ten years. Of course there's lots to consider if you do file for Bankruptcy either way - don't expect to be able to keep any credit cards you have, don't expect to get a mortgage any time soon, and don't expect to find it easy to get new auto insurance or a new apartment if they run credit checks in addition to criminal checks. But then again if your credit is already totally effed up, you already have these problems. At least by filing you can start with a clean slate and start building back up.

A decent attorney will give you a free consultation.

[MercuryFree]

A consolidation loan will kill your credit, plus, if you can't get enough of a loan to consolidate all of the debt, there's no point in the first place. Basically you'd need a personal loan for 8k, and personal loans are really hard to get for people with decent credit, much less for people with bad credit (myself included).

Would it kill her credit more than bankruptcy would though? I would have recommended it otherwise. Even if you can't get enough to cover all your different debts, if you can consolidate 2 20% loans into one 13% loan you're going to be better off regardless...

Moral of the story, debt is bad kiddies.