The credit crisis of 2008 has lead to the economic collapse of 2009, and there is no doubt that it is now much more difficult to qualify for a debt consolidation loan than it has been at any time in the last ten years. There are many reasons for this.
First, as real estate values increased between 2000 and 2007 in the United States and Canada, many people were able to qualify for a home equity debt consolidation loan or a mortgage debt consolidation loan. Unfortunately as real estate prices have crashed, your house equity has also fallen, making it very difficult to get a debt consolidation mortgage.
Second, your ability to qualify for a debt consolidation loan is based on your income. If you have been downsized or laid off, your income is lower, so qualifying for a debt consolidation loan is now more difficult.
So, what can you do?
You may need a co-signer to get a loan. You may need to settle for a lesser loan than what you would otherwise expect.
If you are a senior with substantial equity remaining in your house, you may qualify for a reverse mortgage.
If those options don’t work, you will have to make a personal budget and keep your expenses as low as possible to repay your debts on your own.
During a recesssion, cutting your expenses is critical to avoid bankruptcy, so get started now.
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