Personal Loans or Personal LOC for Debt Consolidation

[twpounds]

I've got another thread under the credit card forum discussing BT cards and paying down cc debts. I have learned a lot in the last few weeks and I am trying to come up with a solid/methodical plan to get us off of running around on the hamster wheel of debt. My wife and I have racked up $44k in cc debt with a $7k balance on a car. Her credit is very low 600s with $21k of the $44k debt in her name as well as the $7k car balance. I have $23k in my name. $5k of which is on a RTG 0% promo that I'm handling fine. My big problem is my capital one card that has the $18k balance on it. I have FICO 8 scores ranging from 797-801. My total utilization rate on my 6 cards is about 22%. However, the utilization rate on my capital one card with the $18k balance is 62%. I recently opened a new Citi card with 0% BT offer for 21 months that I intend on using to put about $5,200 of my wife's cards on to pay off. That would payoff 6 of her cards, but it would put me with a 33.73% utilization rate on the new Citi card. I have not done any BT yet and after doing some research, I think it would be best to try to obtain a personal debt consolidation loan for all or as much of our debt as possible. My debt to income ratio is currently sitting at around 33% which includes my mortgage. I have read about debt consolidation loans and it seems like there are a lot of scams out there as well as the companies that are supposed to be paying your debts while you pay them, but they only cause you to have late payments and ruin your credit. We have no late payments and have been snowballing the best we can, but it is taking a toll on us because it is an extremely slow process. I think a personal loan coupled with 0% BT offers may be the way to go for us. I have read about SoFI and have saw credit unions mentioned as possible personal debt consolidation loan possibilities. I'd like to apply for a loan before doing any BTs while my total utilization and debt to income ratios are still in decent shape. We can make payments, but we would like to see the balances reducing instead of being eaten by the high interest cards my wife has. Do any of you know anything about SoFi or any other companies that would possibly lend me the total $44k or really any large sum at a decent rate(15% or less preferably) given my credit scores, utilization rates, and debt to income ratio? I'd rather not involve my wife at all other than using her income to help pay the loan off because of her low scores and very high utilization. We'd also not want to consider a secured loan such as a HELOC if at all possible. We don't want to risk our house. Would a personal debt consolidation loan or a personal line of credit be the best route and if so, which one would you go with? I'm leaning personal loan over line of credit even though the LOC would give flexibility for unexpected house or car repairs while paying down our cc debt. Any feedback on our situation would be greatly appreciated as well as any personal loan leads that any of you have had good experience with. We have done all the cutting back that we can and we have had the tough discussions about how we got here and how to not get back here. We just need some favorable lending to help us. If I left out any pertinent details, please ask.

[MissLiz]

I don't have experience with SoFi although I have read some positive threads in this forum. Are you currently a member of any CU's? I would start there first. I understand not wanting to put your house at risk. Sounds like you and DW are making some smart decisions to get out of the hole and stay out of it, so congratulations on that. I hope you're able to get some good advice and I wish you the best of luck!

[twpounds]

---

@MissLiz wrote:

I don't have experience with SoFi although I have some positive threads in this forum. Are you currently a member of any CU's? I would start there first. I understand not wanting to put your house at risk. Sounds like you and DW are making some smart decisions to get out of the hole and stay out of it, so congratulations on that. I hope you're able to get some good advice and I wish you the best of luck!

I am still a member of a small credit union from a previous employer that I am able to still utilize. That is where my wife's car is financed through. This is the credit union I contacted that said they normally max those types of loans out at $10-$12k. Not sure if I should proceed with that or look for a larger credit union to attempt to obtain a larger loan which is what the goal is. I will go through and read some of your previous posts tomorrow. Thank you for taking the time to read that long post about our situation and letting me know we are thinking correctly. 

[AndySoCal]

@twpounds  If you are still open to considering a debt consolidation loan the link below is to an article where it gives you list credit union that can give you a loan that would possibly help you. I cannot find a date when this article was published rates etc may have changed

https://www.debt.org/consolidation/credit-unions/ 

Do your research.

[ptatohed]

You didn't state whether or not you have stopped using credit cards.  That is number one.  Number two is to get those rates down.  That can be a combination of 0% BT offers, calling your credit card companies and asking for a courtesy rate reduction and/or a hardship program, or using a LOC.  You mentioned snowball.  Unless that helps you psychologically, it won't help you financially.  Avalanche.  Trust me.  Avalanche.  Lastly, don't dismiss a HELOC.  Personal LOCs are going to be over double digits APR.  HELOCs can be under 10% (look at Third Federal, as an example).  Good luck.  

[twpounds]

---

@ptatohed wrote:

You didn't state whether or not you have stopped using credit cards.  That is number one.  Number two is to get those rates down.  That can be a combination of 0% BT offers, calling your credit card companies and asking for a courtesy rate reduction and/or a hardship program, or using a LOC.  You mentioned snowball.  Unless that helps you psychologically, it won't help you financially.  Avalanche.  Trust me.  Avalanche.  Lastly, don't dismiss a HELOC.  Personal LOCs are going to be over double digits APR.  HELOCs can be under 10% (look at Third Federal, as an example).  Good luck.  

I appreciate the advice. All cards have been stopped with the exception of my capital one card that has the $18k balance on it. This is the card we pay all of our normal expenses with.(gas, groceries, light bill, etc.) We pay each transaction off as it is made and we pay the interest each month so basically this card's balance isn't increasing. I could certainly use our debit card, but it does make me a little nervous if something unexpected happens and we need some cash. It messes with me mentally towards then end of our 2 week pay period if the back account is pretty low. Between my wife and I this is the lowest APR card of them all. This is the one that I've had for a very long time. It's at 18.15% currently. This balance has grown mainly due to larger expenses like home repairs and vehicle repairs over time that we haven't been able to keep up with. I understand both the snowball and avalanche methods. However, in our case my wife's financial situation is in such a state that she can't really do anything credit wise other than provide income. I still have pretty strong credit. I'm trying to get us a little breathing room right now so hopefully I can apply for better credit offers while we work to improve hers. I believe that lowering the balance of my $18k card would help tremendously because it's currently at a 62% utilization rate. I understand that the snowball wouldn't touch this balance until last because it's our largest balance and same with the avalanche because the APR is the lowest. However, it's hurting my utilization and ability to put myself in the best possible position to obtain the best possible credit to tackle more of both of our debts. Does this make sense to try to lower this balance first since my wife really can't do anything credit wise? Hate to say it but it's almost like she's a sacrificial lamb to a certain extent.

I'm not totally dismissing a HELOC, but I would rather try to obtain an unsecured personal loan first. Even if it's at 10-15%. That would at least consolidate our debt and lower our overall monthly payments while seeing the balance drop month over month instead of this high interest credit card. I have thought about a HELOC and yes it is still in the table, but I believe I would want to save that as a last gasp effort. If we are comfortable with a personal loan then that would be wonderful. We could always apply for a HELOC for home repairs or emergency situations. If we aren't comfortable with a personal loan then a HELOC might be necessary. It just makes me very nervous that our house could be taken. If it were a smaller balance for a short time that wouldn't be so bad, but if we're talking $40k for 4-5 years then that will always be on my mind which isn't really a good thing.

I will look at Third Federal. Thanks for the recommendation.

---

[FicoMike0]

Ditto @ptatohed 

As far as the heloc, I appreciate not wanting to put your house at risk, but I'm not sure if isn't anyway. I've only observed two friends go through bk, no personal experience. What I've seen is it's all in. Your house, car everything is included, subject to exemption allowances.

I would think you want to refinance the high rate debt at the lowest rate you can get, for a period in which you can pay it off.

[twpounds]

---

@FicoMike0 wrote:

Ditto @ptatohed 

As far as the heloc, I appreciate not wanting to put your house at risk, but I'm not sure if isn't anyway. I've only observed two friends go through bk, no personal experience. What I've seen is it's all in. Your house, car everything is included, subject to exemption allowances.

I would think you want to refinance the high rate debt at the lowest rate you can get, for a period in which you can pay it off.

---

We are able to make our payments as we have never had missed or late

payments so we aren't quite in BK territory yet to where our house would be at risk. I agree with what you are advising me to do in regards to refinancing high interest debt. Basically, right now the plan that I'm trying to do put together is as follows:

Step 1-$32k-$33k high interest cc debt to a personal loan at somewhere under 15%
Step 2- Continue paying $200/month towards a 0% interest promo with a $4.5k balance currently

Step 3-BT approximately $7k to a 0% interest card for 21 months.

Step 4-Pay my wife's car off with a $7k balance with a IRA after the 1st of the year. 
This should at least consolidate everything and lower our interest and probably payment depending on term length. All of this is assuming I can obtain a loan for that amount. We're not taking on any new debt, only shifting from cc debt to personal loan. Does this look feasible? Would you be considering a personal loan or PLOC to jumpstart this process? Please give me any advice that you have especially on best places to look for personal loans.

[ptatohed]

Good luck @twpounds .   

[FicoMike0]

Looks like a good plan. I would question paying off the car. Often, car loan rates are fairly low. If that's the case, don't trade low rate car debt for higher rate debt, just keep making the payments.