Hardship Loans

Need to apply for a personal loan due to financial hardship? Bills has advice on hardship loans to help you solve your money headaches.

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Debt Relief
Bill's Answer: Answered by Daniel Cohen

Thanks for your question on hardship loans and getting financial help when you are financially struggling.

If you do not have any collateral, what you seek is a signature loan, also called an unsecured loan or personal loan. Personal loans are risky for lenders due to their lack of security and relatively high default rate. Therefore, lenders charge higher interest rates on personal loans, especially those for people with a checkered credit history.

If you own a home with equity, start by seeing if you can qualify for a refinance loan. Refinancing could offer you the lowest costs, especially when interest rates are low. If you don't own a home, or can't qualify for a refinance loan, then examine the different alternative personal loan products, but pay close attention to the costs and the interest rates involved.

Depending on your financial situation, there may be a few alternatives to a traditional personal loan that could assist you in resolving your debt.

Six Hardship-based Loan Suggestions

First, read the Federal Trade Commission document, "Payday Loans Equal Very Costly Cash: Consumers Urged to Consider the Alternatives." You may not be considering a payday loan (I strongly discourage payday loans), but the FTC's suggestions are sound. I recommend reading the document to determine if any of the suggested alternatives to payday loans will work for you. Payday loans are only good as a very short-term hardship loan, when you are certain you can pay it back right away.

Second, consider a loan from Prosper, which is a peer-to-peer lending and investing company. Current rates from Prosper range from 6.73% APR to 34.59% APR, as of February 2014, depending on how Prosper evaluates your credit.

Third, look at Lending Club, another peer-to-peer lender that may offer you a loan. Lending Club interest rates range from 6.78% to 28.69%, also as of February 2014.

Fourth, if you have a 401(k) account, ask your 401(k) plan administrator if loans are allowed under your plan. A 401k loan can offer good rates and does not incur taxes, if you pay it back as agreed. Not all plans allow loans, or limit loans to certain circumstances. I do not recommend taking a hardship distribution from your 401(k), as opposed to a loan, unless you clearly understand the repayment terms and the potential tax implications.

Fifth, visit the Bills.com Bills.com Loan Resources page to learn more about the loan options available to you.

Sixth, if your credit score is not excellent but is improving, look at unsecured loan options from FreedomPlus. FreedomPlus is a new lender that looks at more than credit scores. It's underwriting considers other data, giving borrowers a chance to express their creditworthiness. Loan terms range from two to five years, with a maximum loan amount of $35,000. Interest rates range from 7.49% to 29.99%, as of February 2014.

What if a Loan is Not Right for You?

Hardship loans are not always the best solution, even if you qualify for one. If you are struggling with debt, check out all your debt relief options, including the services of different professional debt relief provider.

You can learn more about debt settlement, credit counseling, debt consolidation loans and all other forms of debt relief at the Bills.com debt relief hub.

I hope this information helps you Find. Learn & Save.




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Comments (28)

Kenshaww J.
New York, NY  |  March 04, 2014
please and please for your own good do your research and choose the right loan, not the first loan, you find.
Revelita B.
Las Vegas, NV  |  October 17, 2012
I was told not to come to work until further notice due to low census. I was assured I still have my benefits and will be receiving a paycheck but that will come out of my PTO bank which to me is not fair. Is this legal. I do not have enough PTO hours left in my PTO bank, and I was not advised how long this "temporary" set back will last. My question is: Can I apply for hardship loan from my hospital, instead of them exhausting my PTO hrs? Can I draw unemployment,while waiting for my hospital to call me back to active duty(all unit coordinators are in the same situation). Thank you.
October 21, 2012
If you're asking if you're eligible for a hardship loan on your retirement account, I recommend you speak with the retirement account administrator. To see if you're eligible for any unemployment compensation, speak with the agency in your state that pays out the unemployment checks.
Robert M.
Old Town, FL  |  February 04, 2011
I have been fighting to get diability since "2003" I fianlly won my case and I am expecting a large check. The "IRS" has a judgement against me for $58k for taxes they alledged I owed from 2003..They never contacted me with regard to the above. Yet they managed to seize my bank account and wipe out my entire $40 savings...Yes thats all I had. My question is this, Can I do a bankruptcy to dismiss this or what are my options? I have no assets other then the home I live in.
February 04, 2011
Regarding bankruptcy, if your IRS debt is related to unpaid income taxes, then there are three criteria for discharging an income tax debt in a bankruptcy:
  1. The taxes must be due for three years
  2. Have been filed for two years
  3. The assessment must be in place for at least 240 days

Consult with an attorney experienced in tax law regarding your IRS debt and your bankruptcy question. I find it unusual that the IRS surprised you with $58,000 tax bill and a levy of your bank account. Alternatively, consult with a tax debt specialist such as Freedom Tax Relief to learn if an offer in compromise (OIC) is a viable option.

Erika T.
Battle Creek, MI  |  January 22, 2011
I am in the biggest mess of my entire life!!!! I am only 30 as of 3 months ago. Lets jump back 2 years....I'm a licensed sleep technologist, making $25 an hour, owned a house with my fiancee. This was from 2002-2009. Now check out THIS mess! Fiancee went psycho, I had to move to an apartment with my name still on the house. I fell asleep while driving in the parking lot of my apt complex (ironic due to my job i know). I hit the tire of a truck going 15 mph, TERRIBLE I KNOW lol. Since I take xanax AS PRESCRIBED they arrested me for a DUI since you are not supposed to take that while driving. They gave me a breathalizer (it was 0) and a field sobriety test (I passed), but still arrested me. So I had to walk into my place of work (the hospital) in handcuffs to make sure I wasn't HURT (geez) Luckily the prosecutor dropped it down to reckless driving, but they still put me on probation. They took my daughter away to live with her dad. Found out a week later my lab (job) was getting shut down. Applied for unemployment. Since there was a mix up with who knows what I called every week, and was told I might not get my money until september (this was now may). 2 weeks later just after I lost my insurance I found out I had to get surgery!!! In the meantime we are in the process of a THIRD shortsale on the house I own!!! I had to withdraw all of my retirement money just to LIVE ON until I got my unemployment. There are no jobs in my field in michigan. I have applied many other places who say I am overqualified! My PO will NOT let me leave the state until I pay my counseling and other court fines. I couldn't afford my tags on my car, then I couldn't pay my car insurance AND car payment, AND rent, plus now over 10k in medical bills. Then I just got a flat tire LOL. Expired tags, flat tire, no insurance! I'm so screwed lol. I'm actually selling all of my stuff (Wii, couch, TV, armoire, bed set, etc. just to pay bills! I have no where to go....no basement to live in....HORRIBLE credit now so there is no way anyone would accept an app for even a low income studio apt! Now I just got friend of the court papers!!!! AHHHHHHHHHHHH!!!!!!!!!!!
Rosana K.
Dayton, NV  |  April 14, 2011
My dearest Erika, This is late as u wrote in Jan 2011. My only consolation is reaching out to others family or friends, let them know just as u had here. I would get on the internet and find another hospital to work at, VA hospitals are truly "gems" for genuine caring for patients veterans and Im sure this applies to employees, consider moving if it means gaining a job, the VA really uses the internet for job resumes, I believe the website for Government jobs is USA.gov on the site you can make a resume for hard copy but most importantly for downloading to many jobs on the sites. I am a retired vet and am thankful for the philosophy they demonstrate. There are 3 sites for gov jobs.
Vaughn M.
October 01, 2011
Erika my heart goes out to you. My wife became very ill also about 7 years ago. took 2 years to get longterm disability to agree she was just to sick to work. She didn't get out of bed for 6 years. We also lost everything including our all most perfect credit score. After 2 R9's had been placed against us it took 6 years in canada for them to be lifted and much hard work on our part to slowly see some relief. Keep your chin up not everything is your fault. Also consider going after the insurance company for financial stress they have caused you. Not sure about the US but in Canada you can, now I find this out great. We have 3 children and we all have suffered greatly because of this. But If I could help you I would!
December 09, 2010
Maria: Lawyers are not miracle workers. Based on the scant information provided by Steve on 6/17/2009, I would have to guess Steve's attorney filed a Chapter 13 bankruptcy. Chapter 13 stalls foreclosure proceedings temporarily until a five-year creditor repayment plan is established. Steve was negligent in not negotiating a short sale, deed in lieu of foreclosure, mortgage modification, or short-refinance before foreclosure proceedings began. A Chapter 13 is a last-ditch effort to save a property you want to keep. The other options I mentioned are less costly and offer a more permanent solution.
Mrs M.
August 20, 2010
Hello, Do you need a loan to enhance your business? Loan to consolidate your debt,Loan for personal use, Loan for credit Card, Medical Care loan, Car Loan,Mortgage Loan, Student Loan, loan for any purposes? e.t.c.
February 16, 2010
First, understand the process and the consequences if you do not take action: How to Stop Garnishment on Student Loans. Second, take action. Read the Bills.com resource Student Loan Forbearance to learn how to ask your bank for a forbearance.
Joy J.
February 16, 2010
I am in default of a school loan that I really really need to pay back, however I don't have any money to pay this loan back. What should I do?
Nick B.
Boro Of Roseland, NJ  |  June 05, 2011
there is something out there got to keep looking everybody gets help try you will make it
January 14, 2010
If you want a conventional home loan (either a deed of trust or mortgage depending on your state), you need to stop working underground and repair your credit. Lenders want three things from borrowers: 1) A strong credit score, 2) A stable employment history, and 3) Proof of income. By working underground you have no 1099s, W2s, pay-stubs, or tax returns to prove to the lenders that you have a stable employment history. Therefore, consider using the $70,000 in cash you have to resolve your collection accounts so that your credit history will improve. Also, consult with a tax attorney to resolve your federal and state tax issues. Finally, do not be tempted to take a loan from anyone willing to lend you money in your present situation. The interest rate will almost be usurious and untenable.
Georginna .
January 14, 2010
I want to buy a house.my job is under contract .I got some cash to put down 70% on a $100,000.00 home but i need a loan $30,000.00.I have a poor credit,No file tax for the last 2 yrs.Can you help me to get a loan?
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