What if I don't qualify for a consolidation loan?

Thursday, October 1, 2020 - 00:04

Consolidation Loans

If you don’t qualify for a debt consolidation loan and you’re struggling to keep up with the minimum monthly debt payments, you have options. If you’re in a financial emergency, consider working with a licensed insolvency trustee (LIT). LITs (like Welker & Associates) are the only people licensed by the federal government to handle consumer proposals and bankruptcies. But if you're not ready to take one of those steps (although meeting with us to discuss your situation is free, so there is no harm in meeting), you have other options. 

There are other strategies and tactics you can use to help you get out of debt with low income. Here are three action items to consider:

  1. Review your budget
    Review your budget to see where and when money is coming in and going out each month. Review your current monthly spending, including credit card bills, recurring subscription fees, and other monthly expenses, to see if there’s anywhere you can cut back. Remember that these cutbacks are temporary and to help you allocate your money strategically while you’re paying off debt.  
  2. Negotiate with your lenders
    Contact your current lenders to renegotiate your payment terms. If you’re struggling to meet your minimum debt payments, they may work with you to lower your interest rate or change your payment due date. Changing your payment due date to better align with when you get paid can help you manage your cash flow and ensure cash is available to pay bills when they are due.
  3. Home Equity Line of Credit (HELOC)
    If you own a home, you may be able to take out a home equity line of credit (HELOC) to consolidate your debt. While a HELOC isn’t a debt consolidation loan, it is a way to access a loan that you can then use to pay off your existing debts. A HELOC is often offered at a lower rate than a personal loan since it is secured by an asset, your home. That said, only consider a HELOC as a debt relief option if you’re absolutely confident that you’ll be able to keep up with the payments. If you can’t keep up with the payment schedule, you risk losing your home. 

A debt consolidation loan can help you consolidate multiple debts into one monthly payment with a lower interest rate. This will allow you to manage your debt and pay it off sooner. But if you don't qualify for one, you have options. If you're struggling with your finances, doin't wait too long before you seek help. We're here to help!