confused about debt consolidation loan

[hellodestiny]

a friend of mine has 10k in credit card and department store debt. (i believe its 4 or 5 different cards totaling 10k)
he is having a hard time keeping up with 4 or 5 seperate bills and that exuberant rates. one of his Cards is a PC mastercard, i told him what i would do is contact them to do a debt consolidation loan, and they will pay his debts and he only has to pay them untill the 10k is clear.
he called them, they turned him down because his credit rating is poor. After ordering his credit reports, he hasnt missed any payments, hasnt applied for new credit in a long time, and in fact his low credit rating is due solely on Debt to credit ratio, as he is pretty much maxed out..

so.. my question is. how can they turn him down for only being maxed out, when you would think this tends to be the sole reason people turn to consolidation loans?

id have to assume anyone who seeks debt consolidation, doesnt have a good credit rating?

im just confused

[Mark77]

Your friend needs to understand one thing, and one thing only:

Credit is not a human right, it is only granted by a willing lender to a worthy individual

Why the heck did he accept and use the credit facility if the rate is/was 'exhorbiant'? And why should another lender cut such an obviously stupid person a deal, when they're legally and contractually entitled to payment at the exhorbiant interest rate?

There's no point in playing a "blame game" at this point, but your friend needs to put in a Herculean effort to pay off the cards, which will probably involve personal sacrifice, potential asset sales (if he has any assets). There's obviously no bailouts at this point in time. Credit is tightening. His only 'weapon' against creditors is personal bankruptcy or creditor protection, but for a mere $10k in debt, the price to his reputation will be extreme if he goes that route.

[hellodestiny]

Your friend needs to understand one thing, and one thing only:

Why the heck did he accept and use the credit facility if the rate is/was 'exhorbiant'? And why should another lender cut such an obviously stupid person a deal, when they're legally and contractually entitled to payment at the exhorbiant interest rate?

not sure what "exhorbiant" means, but I wont worry about that since Im obviously dealing with "such an obviously stupid person". Thanks for adding absolutely nothing of value to my Question.



anyways,

[Bunkhouse]

If that person has any assets, they may be able to get a loan from the bank and then pool it all into a single loan with those assets acting as a backstop incase he doesn't come though in the end.

If he has no assets i'd recommend cutting up all but 1 card, keep making minimum payments but then dump the rest of their payment on the card with the highest rate to pay off one card at a time.

Credit cards need to be treated like a debit card and only buy stuff if you can make the full payment, or when used for an emergency reason (car repair, ect) and then aggressively payed down.

When things get out of hand, compounded interest will destroy you financially.

Credit card rates are set high because they don't require any collateral to backstop losses should the card user default. They will not offer a lower rate or consolidation unless payments stop completely and they are worried about the card user going into bankruptcy, but this is a place you never want to be as it could also backfire.

[caveat_emptor]

I still think you could

[kingofwale]

TDSR max with 10K loan?

either your friend needs to find a higher paying job, or he needs to stop "living it up"

[hellodestiny]

TDSR max with 10K loan?

either your friend needs to find a higher paying job, or he needs to stop "living it up"

yes, He makes horrible money, especially for a good manufacturing job. 13/hr for a job that he would of made 25/hr + for 10 years ago. he hit hard times and is looking for a better job.

This thread isnt about what he should or shouldnt do, or insulting him about his past choices. (considering he will never read this, and Ive allready talked to him about it a million times over)

i made this thread to ask simply, how do people get unsecured consolidation loans if they are turned down simply for a bad credit rating?
I just cant see anyone with good credit needing to consolidate

[starboy869]

He should visit a credit consular/truste and see what options he can do.

[dec12]

I think your friend should consult a non-profit credit counselling agency first. I saw it adverstised on ttc, long time ago.

It's been a while but my personal bankruptcy went something along this line.

The trustee got $1,500 fee, spread over 9 months. My paycheque went to basic neccessity first then trustee fee. The excess either split between me and the creditors, or just go to the creditors (can't remember this part). I assume that your friend got turned down because the debt consolator is not getting his cut after the basic necessity.

Or he may just want consider personal bankruptcy. If the debt consolator won't take him, his credit rating is not that much better than the hit he'll take with personal bankruptcy.