Best Debt Consolidation Loans For Bad Credit

Best debt consolidation loans for bad credit: Good credit is a valuable asset and a source of pride, but bad credit is a condition that eats up its owner. Credit card debt lowers your credit score and with it your ability to buy a house or car, rent an apartment, or sometimes even qualify for a job.

If your credit score drops because you can’t pay your bills on time, it’s time to take action and investigate debt consolidation.

Debt consolidation involves putting all unsecured debt (usually credit card bills) in a pile so that you make one payment per month at a lower interest rate.

Qualifying for best debt consolidation loans for bad credit is challenging. Many lenders do not deal with people with bad credit. This may not make much sense since you wouldn’t need a consolidation loan if you didn’t have a credit problem. But lenders want customers who pay them on time. If you weren’t responsible for paying back loans, credit cards, and other debts in the past, it’s not a risk they are inclined to take.

Even if you get a loan, consolidating lenders will want guarantees that you will repay them. They check your employment history, ask for guarantees if necessary, and demand high-interest payments to compensate for the risk. If this happens, you may want to reconsider whether the best debt consolidation loans for bad credit are the right option for debt relief.

Where Do You Get Best Debt Consolidation Loans For Bad Credit?

Some consolidation loans are better than others and some you should avoid completely. Conventional lenders are the best place to start, but they are probably the most demanding of qualifications.

The most likely creditors for debt consolidation are:

Banks and credit unions

Banks are commercial lenders that are not interested in debt consolidation loans. You may be a loyal customer but be prepared for rejection.

Credit unions are non-profit organizations whose customers also own them. They are usually more flexible because they want to take care of themselves.

Both are regulated and must follow strict rules. For this reason, they use risk-based lending models that charge higher interest rates to borrowers with low credit scores. The lower your score, the more interest you pay and the less money you can borrow.

Debt Consolidation Lenders Online

These companies will pay off your debts with a consolidation loan and you will pay a fixed repayment in monthly installments.

Like banks, online debt consolidation lenders often use a risk model to decide whether to accept you as a customer and how much interest they charge. Usually, they offer several options to Best Debt Consolidation Loans For Bad Credit history. Loan amounts range from $1,000 to $50,000 with repayment terms of 3-5 years. Interest rates can be very high – 25%-35% – so think carefully before you start.

Payday lenders

Put them in the “Lenders to Avoid” column. Payday lenders provide short-term loans at extremely high-interest rates of 399% APR. Compare that to the 25%-30% you pay with your credit cards and the 10%-18% you pay with a debt consolidation loan. Your high-interest rates can quickly cause you to owe much more than you borrowed, which is the opposite of what you want.

Best Debt Consolidation Loans Of 2021

If you have multiple high-interest loans, debt consolidation can help you manage your finances by combining multiple debts into one payment. We’ve researched and selected the Best Debt Consolidation Loans For Bad Credit and good credit to help you get back on track and manage your monthly bills well.

1. LightStream Debt Consolidation Loans

LightStream is our top choice for borrowers with good to excellent credit who don’t want to pay startup fees or prepayment penalties on their debt consolidation loan. The company offers personal loans up to $100,000 with same-day approval financing and has one of the lowest annual percentage rates (APR), starting at 5.93% off auto-pay.

LightStream also features a fully online app and debt consolidation calculator with a smooth credit check that won’t lower your score. With its Rate Beat program, LightStream claims it will lower your rate by 0.10 percentage points if you are approved by a competing lender for an unsecured loan on the same terms.

LightStream takes first place in the J.D. Power 2020 Consumer Credit Satisfaction Study.

PROS

• No costs for a loan application, origination, or prepayment penalty
• No reviews
• Choose when you want to receive your money
• Discount percentage when choosing the automatic payment

CONS

• The minimum loan amount is $5,000
• Automatic payment discount option only available before loan financing
• The lowest rates require excellent credit

2. SoFi

SoFi offers credit card consolidation loans from 4.99% APR with AutoPay. Most lenders have interest rates up to 35.99%, but SoFi limits its competitive rates to 19.63% APR with AutoPay discount. If the customer declines the AutoPay option, the interest rates will be higher.

SoFi loans are free and customers can make payments and check loan status on the SoFi mobile app, available for iOS and Android. The company also offers online prequalification with soft credit pull, fixed rates for the term of the loan, and a fixed payment schedule.

SoFi is ranked 4th in JD Power’s 2020 Consumer Credit Satisfaction Study.

PROS

• Flat rates from 4.99% to -19.63% with autopay discount
• No late fees on personal loans
• Pay creditors immediately

CONS

• Funds are not available on the same day of approval
• Loan terms start at three years to seven years
• The minimum loan amount is $5,000

3. PenFed

PenFed personal loans start at $600, making it the best lender for someone with debts under $1000. This lender has fixed interest rates, a debt-to-income calculator, and an online application. PenFed also has a mobile app for iOS and Android where members can check loan status, make loan payments, make mobile deposits, and transfer their funds between accounts.

To join the PenFed Credit Union, customers must open a savings account with a minimum deposit of $5. Once approved, the loan will be disbursed within 1-2 business days. The APR rate at the time of loan approval is based on credit quality, a credit search, and the length of time you signed up for PenFed.

PenFed is not part of the JD Power 2020 consumer credit satisfaction survey; however, it made our top list for its low-interest rates and no borrowing fees.

PROS

• APR starts at 5.99%
• Sign up and check your application status online
• The loan will be funded 1-2 business days after approval.

CONS

• Loans are up to $50,000
• You must be a member of the credit union to apply

4. Fiona

With partnerships with the likes of LendingClub, SoFi, Avant, and Marcus from Goldman Sachs, Fiona sets itself apart by offering debt consolidation options for people with every type of credit. Fiona also offers no registration fee or prepayment penalty, a fully online application process, and email or telephone customer service.

Fiona’s loan offerings include secured and unsecured loan refinancing, including auto loans, student loans, and mortgage refinancing. The company also offers clients a reference blog on debt repayments and other financial advice.

Fiona is not part of the J.D Power Consumer Credit Satisfaction Study; however, some of its partners are on the 2020 list.

PROS

• Works with any type of credit
• Online application process
• Online Loan Calculator

CONS

• Credit requirements depend on the selected company.
• Some lenders charge a start-up fee of 1 to 6% of the loan amount.

5. Discover

Discover offers a wide variety of debt consolidation options. Customers can select a credit card balance transfer with a promotional interest rate, apply for a personal loan, or use the value of their home for debt consolidation. Discovery does not charge any start-up fees and loan rates are between 6.99%-24.99% APR.

Discover offers 24-hour service, seven days a week over the phone, and has a mobile app for iOS and Android that allows customers to check their FICO score, access their bank account, make payments, check balances, and more.

Discover is ranked third in the J.D. Power 2020 Consumer Credit Satisfaction Study.

PROS

• Different Debt Consolidation Options: Balance Transfer, Personal Loans, Home Loans, Student Consolidation Loans
• Help with the application by loan experts
• Discover mobile app

CONS

• Minimum annual household income of $25,000 to qualify
• Late Payment Fee of $39

6. National Debt Relief

National Debt Relief didn’t make it onto our main list because eligible borrowers must have at least $7,500 in high-interest debt. In addition, they charge a fee of at least 15% of the debt amount. National Debt Relief is not a lender, but a debt management service.

PROS

• Negotiating with creditors to settle outstanding debts
• online budget

CONS

• Only work with customers who have at least $7,500 in debt
• A compensation of 15-25% of the debt amount

7. AM One

There isn’t enough information about interest rates and loan rates on AM One’s website to include this lender in our master list. At AM One, the interest rates and borrowing costs depend on the lender with which the borrower is paid at the time of approval.

PROS

• Helps improve credit if the loan is declined
• Live Support in the US

CONS

• Credit requirements depend on the selected company.
• No cost information on the website
• Credit and APR requirements depend on the company selected.

8. Best Egg

Best Egg is not on our top list due to its high production rate and below-average rating in the J.D. Power Consumer Credit Satisfaction Study.

PROS

• Approval in minutes
• APR from 5.99% -35.99%

CONS

• Below average in the J.D. Power Consumer Credit Satisfaction Study
• An origination fee of 0.99 to 5.99% of the loan amount

9. Loan Club

Loan Club, a marketplace for debt consolidation loans, didn’t make it into our top picks because of their startup costs and higher interest rates than other lenders on our list.

PROS

• Customized Loan Options
• A grace period of 15 days after the due date to pay penalty-free

CONS

• An origination fee of 3-6% of the loan amount
• Higher APR rates than other lenders from 7.04%

10. OneMain Financial

OneMain Financial is not on our top personal loan list due to its high APR rates, startup fees, and late payment fees compared to other lenders on our list. In addition, this lender scored below average in the JD Power Consumer Credit Satisfaction Study.

PROS

• Debt Consolidation Calculator
• Expert advice on loans

CONS

• 18% APR -35.99%
• Late Payment Fees of 1.5-15% of the Loan Payment
• Origination costs of 1-10% of the loan amount

11. Forward

Avant is not on our list of clients because of the high interest and management fee. In addition, this lender was rated below average in J.D. Power to consumer credit satisfaction.

PROS

• Funded one day after approval
• No penalty for prepayment

CONS

• Administration costs up to 4.75%
• APR from 9.95% -35.99%

12. Marcus by Goldman Sachs

Marcus from Goldman Sachs is not on our top list due to its interest rates and longer loan disbursement turnaround times compared to other lenders.

PROS

• Tax-free
• Loan options in 5 minutes

CONS

• Loan paid out within five days of approval
• Rates from 6.99% APR to 19.99%
• Not suitable for smaller debts

13. Startup

Upstart didn’t make our list of the best debt consolidation loans because of its limited supply and below-average score in J.D.’s study. power. Upstart can be a good option for those with reasonable credit and excellent credit scores.

PROS

• Loans from $1,000 – $50,000
• Check the loan interest online

CONS

• Only offers three and five-year terms
• FICO or Vantage Score of at least 600

How Do I Choose The Best Debt Consolidation Loans For Bad Credit?

It is important to get a debt consolidation loan that fits your budget and helps you achieve your goal of eliminating debt. Many lenders will pre-qualify you without doing a difficult credit check. Pre-qualification gives you a good idea of ​​the rate, loan amount, and loan term you may be eligible for.

You can then use them to compare options and decide which one is best for you based on the following factors.

Annual percentages

When purchasing a debt consolidation loan, look at the APR and make sure the repayment term is comfortable.

You want to lower the interest rate on your debt as much as possible, but don’t fall into the trap of extending your loan term too much. Due to the extra payments, part of your savings will expire.

Consider making additional payments so that you pay the same amount of debt as before the consolidation, but at a lower rate, you will have to pay it sooner and at a lower cost.

Loan Costs

When you shop, you compare borrowing costs, such as start-up costs and other costs. You want to make sure you get the best overall situation, so compare your total loan cost. You may find a fee lender a better choice because of a lower APR or you may find that the fees are much higher than the lower APR.

Resources for Lenders

Lenders may not offer the same features, and certain features can make the debt consolidation and repayment process more convenient for you. Potential useful features include things like the new lender that makes direct payments to your previous creditors so you don’t have to do it yourself, credit monitoring, hardship programs, and other customer service programs.

Accounts Payable and Debt Consolidation Costs

There are numerous options for debt consolidation loans, so be careful when researching each one. In other words, don’t just look at interest rates.

How To Qualify For A Best Debt Consolidation Loans For Bad Credit?

Each lender defines its requirements for borrowers seeking the best debt consolidation loans for bad credit. However, each lender will analyze your credit score, income, and debt-to-income ratio to determine how much you can repay the loan. Often you will need a credit score of around 650, even though there are lenders with bad credit; these lenders can accept credit scores of 600 or even less. Remember that the lower your credit score, the higher your interest rate.

4 Steps to Getting a Debt Consolidation Loan for Bad Credit

If you’re struggling to get out of debt and think a debt consolidation loan could help, you probably need a mid-600s credit score, a history of on-time payments, and enough income to qualify. However, every lender has its requirements. Start with the following steps to help you find the right personal debt consolidation loans and increase your chances of getting approved.

1. Check and monitor your credit score

Lenders base loan decisions primarily on your credit condition. In general, the lower your credit score, the higher the interest rates that lenders will offer on your loan. To qualify for a debt consolidation loan, you must meet the lender’s minimum requirement. This is usually in the 600 range, although some lenders with bad credit may accept scores as low as 580.

Many banks offer free tools that allow you to check and verify your credit score. Once you know your credit score, it’s easier to identify lenders that may want to work with you. Not only are there lenders that specialize in loans for people with bad credit, but many list credit score requirements on their websites.

2. Shop around

It is rarely a good idea to accept the first loan offer you see. Instead, research and compare loan amounts, repayment terms, and rates from various sources, including local banks, national banks, credit unions, and online lenders. This process may take some time, but it could save you hundreds if not thousands of dollars.

The easiest starting point can be online lenders, as you can often view your rates with a smooth credit check, which will not affect your credit score. However, it may also be worth checking the offers with your existing bank; if you have a good relationship with a bank or credit union, they may be more willing to overlook below-average credit.

3. Consider a secured loan

Personal debt consolidation loans are usually unsecured, meaning they require no collateral. If you are having a hard time getting approved for an affordable unsecured debt consolidation loan, a secured loan is worth considering.

Secured loans require some form of collateral, such as a vehicle, house, or another asset. The collateral usually needs to be worth enough to cover the loan amount in the event of default. Because of this, it is usually easier to get approved for a secured loan than for an unsecured loan, and you may even qualify for a better interest rate.

4. Wait and improve your credit

If you’ve tried everything and can’t find a loan that will save you money, you might want to wait and take some time to establish a better credit score.

Set a goal to pay your monthly debts on time, every month, for several consecutive months. It’s also a good idea to focus on paying off credit card balances and eliminating all non-essential monthly expenses like subscriptions and frequent dining out.

“Create a short-term plan that ensures you consistently allocate money each month to pay off debt,” said Steve Sexton, CEO of Sexton Advisory Group. “After building momentum for a month or two, request a meeting with your bank or credit union to evaluate your efforts and apply for a debt consolidation loan. You will have better luck with a bank or credit union than with an online lender because you can show that you have already started taking steps to pay off your debt and resolve the issue. ”

It’s also a good idea to get a copy of your three credit reports, which you can do once a year for free (or weekly through April 2022 through AnnualCreditReport.com), and check for errors. If you find one, you can dispute it with the three credit reporting agencies, Equifax, Experian, and TransUnion.

Should You Apply For Best Debt Consolidation Loans For Bad Credit?

There are several things to consider when applying for a debt consolidation loan.

• If you are considering a secured loan, you are putting a valuable asset (such as your house or car) as collateral.
• The interest rate for someone with bad credit will be very high. First, improve your credit and then apply.
• Applying for a new line of credit creates a difficult question on your credit report and can lower your credit score.
• Some lenders offer things like instant payment to creditors, free credit score monitoring, and flexibility if you run into trouble.
• Taking out a debt consolidation loan, but continuing to build up debt, will only put you in a worse situation.

How much will you save monthly, as well as in the long run, by consolidating your debt?

Many loan sites have free debt calculators that will help you figure out what you are paying now and what you would pay with a certain interest rate and loan term. It may seem like a lot of work, but it’s a job you have to do.

Does a bad credit score automatically disqualify you?

A credit score is likely an important factor in qualifying for a debt consolidation loan. They help determine what the interest rate will be. When your credit score drops — usually due to late credit card payments — borrowing money can range from difficult to impossible. Pay close attention to your credit score.

How To Apply For Best Debt Consolidation Loans For Bad Credit?

If your credit score is below 660, but your credit cards have been disabled for six months, work on improving it. Also, check your credit report for errors that lower your score.

If you have a relationship with a local bank or credit union, you must first apply. If not, now is a good time to open an account. Bring financial records (pay stubs, tax records, bank statements, etc.), a social security card, and some form of state identification.

Be prepared to present a business as a reliable borrower. Show them a budget or evidence of recent responsible financial behavior. Don’t take on any more debt.

Benefits of a Debt Consolidation Loan

Consolidating your debt can save you money. If you have multiple double-digit credit cards and qualify for a lower-rate personal loan for debt consolidation, you can save a lot of money in interest and potential costs.

It also simplifies your finances. A debt consolidation loan combines multiple debts into one monthly payment with a fixed rate and a fixed repayment term so that your monthly payments stay the same and you know when the debt will be paid. Credit card charges vary, so your monthly payments will vary depending on your balance, and it can be difficult to know when your debts will be paid.

Also, using a consolidation loan to pay off multiple debts, especially credit card bills, can positively impact your credit score. Credit scoring models, such as FICO and VantageScore, put a lot of weight on your credit utilization rate (how much of your available credit you’ve used). When a new consolidation loan lowers your credit utilization rate, your credit score can go up as a result.

Of course, you should avoid late payments or rebuild balances on recently paid credit card accounts. Otherwise, you could put your credit in a worse position.

How to manage your debt consolidation loan

Once you get the money for a debt consolidation loan, it’s important to manage the money responsibly. Here are some ways to pay off your debt consolidation loan without building up new debt.

Make a budget

Once you’re approved for a loan, create a budget outlining how you’ll repay the money each month to make sure you can do it.

“Know in advance how much you have to pay per month,” says Exantus. “If the amount you’re going to pay isn’t within your current budget, there’s no point in going ahead with a debt consolidation loan.”

Alternatively, you can immediately reduce some of your current discretionary spendings to ensure you have enough cash on hand to pay off your loan each month.

Pay all debts immediately

Once the money from the consolidation loan is in your account, you must first pay off all your debts.

“Some people will take the money and continue to use it for other purposes, or they will stop paying all their debts,” said James Lambridis, CEO of DebtMD. “This will only put you in a worse financial situation.”

Set up automatic payments

After getting the debt consolidation loan, check if the lender offers automatic payment. Many do and some even give you a discount to set it up. It’s a good way to potentially lower your interest payments if your bad credit results in a high rate. It will also help you stay on track – especially important for your credit, as paying off loans on time is one of the best ways to improve your credit score.

Solve any spending issues

Finally, you need to identify and resolve any ongoing spending issues. Without addressing the monetary behavior patterns that caused the problem in the first place, it’s easy to get back into debt, Sexton says.

This means that you should not withdraw these credit cards after they have been paid because you do not want to go back to square one.

Alternatives to a Debt Consolidation Loan

Debt consolidation may not be the best option for everyone. If you cannot qualify for a debt consolidation loan at a lower interest rate than you are currently paying, you may want to consider some of these alternatives.

DIY solutions

There are a few ways to change your financial plan without going through a third party. To start handling your debt, you can:

• Update your budget. Compare how much you spend with how much you earn and see where you can cut costs to free up more money to get out of debt.
• Renegotiate the terms of your debt. If you’re struggling to meet your minimum payments, your creditors may be willing to lower your interest rate or work with you in other ways.
• Request an adjustment of the best before date. You can schedule all payment terms almost on the same day. While this isn’t the same as consolidating your debt, it can help you manage your obligations more easily.

Debt Management Plan (DMP)

The National Foundation for Credit Counseling (NFCC) is a not-for-profit financial counseling organization with affiliated agencies nationwide that offer debt management plans (DMPs).

In a sense, DMPs are another type of debt consolidation for bad credit. While in the program, you pay a flat-rate monthly payment to your credit consulting firm that covers multiple bills for the month.

The agency, in turn, pays each of its creditors on its behalf (usually at a lower agreed-upon interest rate). Most debt management plans take three to five years to complete.

That said, going through this process usually results in a note on your credit report that you have a debt management plan. While the rating will not affect your credit score, new lenders may be hesitant to offer new lines of credit.

Home Equity

If you own a home and have significant equity, you can get a loan to consolidate your debt. A home loan isn’t technically a debt consolidation loan, but it can help you get a low-interest rate because the loan is backed by your home.

Keep in mind that while using your equity can help you qualify for a mortgage and potentially get a lower interest rate, there is also significant risk involved. If you can’t make the payments, you risk losing your home through foreclosure. It is best to follow this option only if you are sure that you will have no problems paying off the debt.

Ways to leverage your home’s value for financing include:

• Mortgage loan. A mortgage loan, also known as a second mortgage, is a fixed-rate loan that homeowners can take out with their equity as collateral.
• Home Equity Line of Credit (HELOC). A HELOC is another type of mortgage that is guaranteed by the value of your home. Instead of borrowing a fixed amount at a fixed interest rate, you get a line of credit – similar to a credit card. This gives you access to money when you need it, up to a maximum loan limit. When paying off the balance, you can borrow up to that limit again.
• Withdrawal of refinancing. With cash refinancing, you take out a new mortgage for a higher amount than what you currently owe for your home. From there, you can use the remaining money to pay off your debt.

What to do if your situation is dire?

Debt consolidation loans and the alternatives mentioned above are best for people who can qualify for low-interest rates. If you’re drowning in debt and can’t pay your monthly payments, it may be wise to consider credit counseling, debt settlement, or bankruptcy.

While these options aren’t ideal, they can be your ticket to some relief.

Credit Guidance

A credit bureau can help you by acting as an intermediary between you and your creditors. A credit advisor can help you understand your credit report and suggest steps to improve your credit score and achieve financial stability. Some credit consultancies even offer limited free services.

If you are struggling to manage your debt, credit advisors can also create a debt management plan for you. Credit consultancies typically have contracts with creditors at lower interest rates than what you are currently paying.

Debt Settlement

Debt settlement goes one step further than debt management. Debt settlement companies such as National Debt Relief and Freedom Debt Relief work with you to pay off your debt for less than you owe.

The caveat is that you usually have to pay enough into an account with the debt settlement company before they begin negotiations with your creditors — often at the expense of your regular monthly payments, leaving you in default.

Failure to pay your debts can further damage your credit score, which can take a long time to rebuild.

However, there are also some positives to consider when settling debt, Exantus says. “If your credit is already bad, defaulting on your current debt isn’t negative because you’ll end up saving money by paying your creditor less than what you would originally pay if the debt consolidation company didn’t step in. ”

However, remember that reaching a zero balance on your debt will not make late payments or other derogatory comments disappear from your credit report. You’ll be stuck with the negative bill on your credit report for up to seven years from when you got bad debt (although it should affect your score less and less over time).

Debt settlement services also come at a cost, sometimes regardless of whether the company is successful in negotiating your debt reduction.

Bankruptcy

If you’re experiencing financial difficulties and even debt settlement doesn’t seem possible, bankruptcy may be your only option. Depending on the type of bankruptcy you file, you may have to place your assets under the control of a bankruptcy court and agree to give up most or all of your assets.

Keep in mind that filing for bankruptcy doesn’t release all types of debt — you still have to pay off student loans and child support debts, for example. Bankruptcy also stays on your credit report for up to seven to 10 years. As a result, it can take years before you are eligible for certain types of credit again.

That said, filing for bankruptcy can give you a second chance to rebuild your finances. With due diligence, your credit can eventually be restored as well.

If you are considering bankruptcy, consult a bankruptcy attorney for advice on the best course of action.

Beware of predatory creditors

If you are considering a debt consolidation loan, remember that some lenders are predatory. This is especially true for lenders who work with people with low credit scores. They often charge exorbitant interest rates and a variety of additional fees.

For example, online companies like OppLoans charge three-digit APRs. That said, it’s not nearly as expensive as payroll loans, which can charge APRs up to 1,251.43 percent.

Taking out a loan with such a high-interest rate can be very expensive and can put you in even more debt. Also, using a predatory lender defeats the purpose of a debt consolidation loan, which is to make it easier to pay off your debt.

“It’s sometimes hard to identify who the lenders are when it comes to consolidation loans, especially if you have bad credit,” says Exantus. “Anyone offering you something can feel like a win. The important thing is to read the fine print. Don’t make deals without fully understanding what it will cost you. ”

Predatory loans are loans that benefit the lender at the expense of the borrower, Sexton adds. Warning signs include:

• The interest in your creditworthiness sounds too good to be true.
• The lender puts pressure on you to act quickly.
• The lender is putting pressure on you to take out a risky or expensive loan.
• The lender asks you to lie about your application.
• Rates or conditions change suddenly upon closing.

Conclusion – Best Debt Consolidation Loans For Bad Credit

Regardless of how you get out of debt, it’s important to have a plan to achieve your goal. It can be daunting if you can’t find a good debt consolidation loan or if you are faced with the prospect of debt settlement or bankruptcy. But don’t let discouragement stop you from taking action. If you can prevent an account from going to collections while you decide, do so.

Also, remember that debt consolidation loans are a temporary solution. They don’t address the core issue of how you got into debt in the first place. If you opt for a debt consolidation loan, be sure to take additional steps toward financial stability, such as creating a budget, limiting your overspending, and seeking additional income opportunities. You should also avoid building up new balances on accounts that you have just paid.

Finally, be careful when you take out the Best debt consolidation loans for bad credit that you may qualify for, just to pay off your debt quickly. Taking out a robbery loan to pay off your current debt is trading one problem for another.