Legal Q&A (NOT gun related)

[BigBear]

Hello Folks,
I hope you all have had a wonderful Christmas. This was my first Christmas as a married man and it was thouroughly enjoyable. A nice movie, nice dinner, and then some cuddling... hehe. No, we didn't do the present things due to our current financial condition but we enjoyed it none the less. That leads me to the topic of this thread.
I am a recent college graduate, out of a Master's program. Loan repayment will be coming due soon and I have a few questions. I know, I know, I should never take advice off of the inet but I'm sure some of your have "been there" or know of some other options that I am not aware of.
First off, I have contacted the agencies and they are a pain in the butt. Not very helpful, nor take the time to explain their answers to my questions. So here I go:

1. Let's say I have around 40K in "total" debt (credit cards, student loans, everything, etc). Would it be advisable to go to a bank and see if I can get a 40K personal loan to pay everything off? My thinking is that then I will just have the one loan to worry about tracking. Things that come to mind are maybe the bank loan has a higher interest rate? How do you know how much you are "worth"? --Meaning, I do not make 40K a year in my current job, why should they loan that to me?

2. How do you consolidate? Or, what is the best way to consolidate?I've heard that you can't combine gooberment and private loans in a consolidation. I hear TV/radio/print commercials/advertisments about debt consolidation but they all want money for their services (which is understandable).

3. Need more info? Help me to help you! lol.

Thanks,
Tim

[esaabye]

Let me take a stab at some of this for you based on my experience.

You can consolidate student loans, I think both gov and public, but only once so make sure your rates are good. No reason to move off low rate to a higher rate just to simplify.

You can also get a hardship forbearance until you are making the income needed to support the loans. This is not fun and requires lots of time on the phone to do.

I am not a fan of consolidating the non-secured debt as most people just rack it back up (we did it several times, no more). If you do want to do it you will need to secure it with an asset, banks are not handing out large unsecured loans these day nor do I remember them doing so ever. If you have a home with equity that is an option but now you just turned that car payment into a 30 year debt for a 4-6 year car.

Best suggestion I know is to pile all you extra cash on the smallest debt, get rid of it and move to the next. No magic, just some work.

Good luck!

[BigBear]

Hmmm... Do you have any resources where you can consolidate gov and public loans. From what I understand, we can consolidate all the govt together and all the public together but not both together in one lump sum. I hope that made sense.

I am a renter and own my car (if you can call it a car... lol). I have no assests or equity to play with the bank so that option is out.

I honestly wouldn't mind the higher interest rates if it would lower the payments to something more manageable. Yes, I'm aware I would be paying a lot more in the long run.

Non secured debt? Is this the term for the credit card? We are actually pretty good with that. There is only about 5K of that and most of it is medical and car repair type stuff. We don't just go "spend" it on a night out or anything.

Anyways, thanks for the info. I guess I'll sit down tonight and figure out which ones are the smallest and go from there. My biggest concern is while trying to pay off one, going into "default" or something on the other and people coming for my car, guns, court costs, whatever.

[esaabye]

I understand where you are, we have all been there and sometimes I feel like we are going back but the math is simple regardless.

Incease income, reduce expences. No way around it.

I remember working extra side jobs, even had a landscaping company I would run at night after my 10 hour day at the office. It took some time but we got the income up and the debt down. Also found that when you are working 80-100hrs you do not spend as much.

Have a plan, no where and what you are going to pay, keep eveything current and put all the extra at the smallest until it is gone. Be sure you and your spouce / gf are on the same page or you will get in trouble.

Get a hardship deferment on the loans if you can, gives you six months to put that money at other debt. You may have to sell some stuff in the short term but will feel much better when you are back in control.

This is a link to the loan consolidation info for the student loans.
https://loanconsolidation.ed.gov/AppEntry/apply-online/appindex.jsp

Again, we have all been there, but now you have your masters so put it to work and solve this problem just like it was a project at school.

[GreenScoutII]

Well, my wife and I are in a similar situation. My wife incurred considerable student loan debt while pursuing her post-graduate degree. She also went back to school to get her CPA in addition to her MBA, but her employer paid for that fortunately. She was able to consolidate her student loan debts to a single payment at an excellent interest rate. It still costs us about $375 a month and we will be paying that until the Second Coming or until the world ends on Dec 21, 2012.. (just kidding)

Anyway, don't make the mistake I did with consumer debt. I took a consolidation loan to make that a bit more manageable. It was fine till I lost my job in this crappy economy. Out of necessity, we ran some creditcards back up.

My plan is to try REAL friggin' hard to sell my house in the Springs and pay off bills with that money. Also, God willing, I'll find steady employment soon. Thirdly, any tax return money will be used to pay bills. Finally, we will put back some cash in the bank to cover emergencies.

I have closed all of our credit cards except one. When they are paid off, we're done.

I like Dave Ramsey. I've been listening to his radio show and I will follow his advice and NEVER BORROW MONEY AGAIN.....

P.S. The potential upside to heving been laid off so much this year is it will (hopefully) reduce our tax liability.

[BigBear]

Good stuff, thank you folks, I will see what I can do.

GreenScout, if you don't sell the house, you up for renting it out? Wife and I are looking to get out of the apartment.

Esaabye - thanks for that link, look like a good read.

[Circuits]

1. Let's say I have around 40K in "total" debt (credit cards, student loans, everything, etc). Would it be advisable to go to a bank and see if I can get a 40K personal loan to pay everything off? My thinking is that then I will just have the one loan to worry about tracking. Things that come to mind are maybe the bank loan has a higher interest rate? How do you know how much you are "worth"? --Meaning, I do not make 40K a year in my current job, why should they loan that to me?

Only reason to consolidate is if it lowers your overall interest rate (combining high-rate and some low-rate debts into one overall lower-rate debt), or achieves that target by reducing costs or fees associated with the payments. In other words, there's no financial reason to consolidate just to simplify your bill paying.

The very best way to pay off debts is to live within your means (spend less than you earn), and systematically pay off what you already owe. You start with your highest interest-rate debt first, pay that one off as much as you can every month and make ONLY minimum payments on the other debts. When you've paid off the highest rate, put everything to the next-highest rate, and so on.

Consolidation, or balance transfers of portions of the debt are fine, so long as they reduce the interest rate of the debt you're transferring or consolidating, and don't exceed the savings in interest with fees. If you've got a CC with $10k balance at 21.9%, and an offer of no-fee balance transfer to a new card at 5.9%, then do it. Cut up the card you just cleared. Do that with your highest interest rates first, and don't use the card you transferred to for ANYTHING else... they've usually got a higher interest rate on purchases or cash advances than on the balance transfers, and the CC company gets to decide which interest-rate purchases get paid off first with each payment you make.

[BigBear]

Rgr, I understand the concepts of paying off the smallest first and building up...

The problem I'm having is that all the "come due" loans are like $150-300 payments. That times four or five loans adds up quick, hence the questioning about consolidating.

There is always room for improvement of course. We do live within our budget (hence I only have a few firearms instead of safe fulls! HAHA). We are both decent cooks so we don't eat out. Not really into frivioulous spending or over indulgence. We know it's the little things that add up, a Burger King here or a extra trip to the store there.

Another question, are interest rates a national standard thing or does each company get to set it's own?

[Elhuero]

Having one nice neat payment aside from your regular day to day stuff is ok, but it's not required to pay down debt. You can get good consolidation loans if your credit is good.

Look into programs for your school loans. Here's some interesting info I found recently:

http://articles.moneycentral.msn.com/CollegeAndFamily/CutCollegeCosts/kiss-those-student-loans-goodbye.aspx

Call your favorite credit union and talk to them. Look at your credit card, see if you can qualify for a line increase to move all the unsecured stuff to one spot.

[Elhuero]

Another question, are interest rates a national standard thing or does each company get to set it's own?


most lenders base their rates on LIBOR

http://en.wikipedia.org/wiki/LIBOR

generally that's the "starting point", and the exact rate is determined by the agreement, is set by the bank and can vary greatly from person to person.

so it's a little of both. there is a standard that they base it on, and banks get to set their own rate depending on the deal.

if you have good credit you'll get good rates.

[BigBear]

Thank you. I'll get to work and see what happens.