Are you having trouble trying to get a bad credit debt loan? Are you finding out that the terms of the loans being offered are worse than the terms on the debts that you already have? I'm not surprised. But not to worry, there are much better debt help options out there for you that you may not even be aware of.
Now, you may be saying to yourself... "Easy for you to tell me not to worry. You're not the one with bad credit and a load of debt!" This is true. But to be clear, I am only telling you to not worry about your inability to find a new loan to pay off your debts. I am not telling you not to worry about your debt situation.
Fact. You cannot borrow more money to "pay" your way out of debt. Even people with good credit fall into this trap. They wrongly believe that "shifting" their debts from one creditor to another is the path to debt freedom. It is not.
Even if you were able to get a bad credit debt loan with decent terms (ie. low interest rate and lower payments), if you have not addressed the underlying cause of your debt problems you are likely to find yourself in worse financial shape twelve months down the road. Why? Many people who take on new credit to pay off old debts end up learning the hard way that this leads to more debt not less.
For example. Let's say that you have $20,000 in credit card debt with an interest rate of 22%. What you should be asking yourself is "How did I get into $20,000 worth of credit card debt in the first place? And why is that debt continuing to grow?" But instead, you mistakenly look for the "quick fix" and run out to get a bad credit debt loan. The new $20,000 loan has an interest rate of 14% and a 10 year term. You use the money from the loan to pay off your credit cards, your monthly debt payments are lowered and all appears rosy.
Fast forward 18 months from now.
Because you never really addressed the underlying cause of your debt problems in the first place, you have continued to rely on your (newly paid off) credit cards to cover expenditures that you simply cannot afford. As such you have now racked up an additional $8,000 in credit card debt. Now you have $28,000 in debt (less any payments towards the original $20,000 loan) as opposed to $20,000. And unfortunately, this is an all too common situation for people who seek debt loans as an answer to their debt woes.
There is a better way than to go out and get a bad credit debt loan. And a way that works regardless of whether your credit is good, bad or excellent.
If you haven't picked up on it yet, the first thing you must do to get yourself out of debt is to start with a plan. And the backbone of that plan is a workable and realistic budget that allows you to live below your means. Now don't be scared off. I know most people think of the "budget" as a four letter word. It conjures up thoughts of deprivation and unhappiness. But the fact is, nothing could be further than the truth.
Preparing, and sticking to a budget can be an empowering experience both emotionally and financially. It can give you peace of mind (knowing you are not going further into debt) and it can drastically improve your life financially by allowing you to pay off your debts faster. And once those debts are gone, that "extra" money each month can be put towards important and "fun" things like retirement and perhaps the odd vacation.
The second thing that scares people about budgets is that they seem too complicated. Well believe me, they don't have to be. Budgeting simply means spending less than you earn. And half of that battle (or more than half) is accomplished by mapping out how that money will be spent before you spend it.
One of the main reasons people try to get a bad credit debt loan (or any debt loan for that matter) is to lower their interest rates and lower their monthly payments. The problem for people with bad credit is that it is difficult to get a new loan with terms better than they have now. A possible solution to this is to enter a debt management program.
A debt management program combines the power of money management (budgeting) with the lowering (or eliminating) of interest rates and the restructuring of monthly debt payments to fit your budget. Once you enter this type of program (which is open to anyone regardless of their credit history) you will be counseled on money management skills and budgeting and your debt counselor will then work with your creditors to seek concessions on your debts.
I suppose by now that you have picked up on the fact that I'm against bad credit consolidation loans as a debt relief option. And my guess is that you have looked unsuccessfully for a loan that makes sense already. So do yourself a favor and forget about borrowing your way out of debt. Debt management is just one option. There are others. For a full list of those options, and to find the one that suits your situation best, I recommend that you start with my article on your debt options here.