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Hardship Loans

I need to apply for a personal loan due to financial hardship. This is the first time I have been in this position. What advice can you give about getting a hardship loan to help solve my money headaches?

I need to apply for a personal loan due to financial hardship. Where can I go for a hardship based loan and what advice do you have?

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Bill's Answer
(42 Votes)

Debt Relief

  • Review our 6 tips for hardship based loans and alternative loan products.
  • A cash-out refinance is a good option, if you own a home with equity.
  • Consider help from a debt relief provider as an alternative to a hardship loan.


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

You didn't specify the cause of your hardship, but some common reasons people struggle financially are: loss of income due to job loss; medical expenses not covered by insurance; divorce; and disability, to name but a few. Any of these can result in a drop in cash flow and the need to raise some money in order to meet all your debt obligations.

Given your situation and goals, it makes good sense to understand the types of hardship loans available and whether you can qualify for one. Depending on the specific facts of your financial situation, there may be a few alternatives to a traditional personal loan that could assist you in resolving your debt.

If you can't get a hardship loan, or the only one you can get has very unattractive terms, then looking for other debt relief solutions that will ease your financial burdens is your best course.

Your Hardship is too Severe to Get a Loan?

If a hardship loan is not a realistic solution, you may benefit from professional debt relief assistance. Get a free consultation with a's approved debt relief provider.

Six Hardship-based Loan Suggestions

Look into the following hardship loan options, comparing any fees that come with the loan, the interest rate, and the affordability of the monthly payment.

A 'No' Demands an Explanation

If you are turned down for a loan, ask the lender the specific reason(s) your application was denied. Also ask them what steps you would need to take in order to qualify.

Cash-out Refinance

If you own a home with equity, start by seeing if you can qualify for a refinance loan. Refinancing could offer you the lowest rates of any loan option, due to the security of your home that you use as collateral. There are cash-out loans that accept borrowers with FICO scores that are lower than the FICO scores required for unsecured loans.

Peer-to-Peer Loan

Consider a loan from, which is a peer-to-peer lending and investing company. Current rates from Prosper range from 6.38% (for borrowers with excellent credit) to 35.36%, for higher risk borrowers, as of October, 2017 depending on how Prosper evaluates your creditworthiness and offers its lowest rates to borrowers with excellent credit. Higher risk borrowers are going to get higher interest rate loans.

Lending Club is another, large peer-to-peer lender. Unsecured personal loans from Lending Club range from 5.32% APR to 30.99%, as of October 2017.

Retirement Account

Borrowing from your retirement account has serious downsides. You are reducing your retirement holdings.If you don't pay it back as agreed or if you leave your job before it is repaid, you will be hit with penalties and taxes. That being said, depending on your need for money, the benefits could outweigh the costs.

A big pro is that you are not judged on creditworthiness or debt-to-income ratio in order to get the loan.

Not all 401(k) plans allow account holders to borrow against their holdings. Ask your 401(k) plan administrator if loans are allowed under your plan.

Online Hardship Loan Lenders

Check out loans from other online lenders that make unsecured loans, such as loans available from FreedomPlus. FreedomPlus looks at more than credit scores. It's underwriting considers other data, giving borrowers a chance to access lower rates due to factors outside of credit score. For example, if you have over $40,000 in retirement accounts or take out a debt consolidation loan and FreedomPlus pays off your creditors directly, using your loan proceeds, you could get a lower rate.

FreedomPlus loan terms range from two to five years, with a maximum loan amount of $35,000. Interest rates range from 4.99% to 29.99%, as of October, 2017.



No Advance Fees

Never pay a fee in advance for a loan, especially if it is from a "We make loans to anyone; bad credit is not a problem!" lender. Scammers will take a fee from you and not give you a loan.

Payday Loans

A payday loan may be the only hardship loan for which you can qualify. Payday loans have very high fees. If you don't pay it back as agreed, can be a debt trap. Payday loans are only good as a very short-term hardship loan of last resort, when you are certain you can pay it back right away.

I also recommend that if you are seriously considering a payday loan, you read the Federal Trade Commission page with consumer information about payday loans.

Know Your State's Laws

Before you take out a payday loan, be sure you know the payday loan laws that apply in your state, such as whether a online payday loans are legal in your state.

Loan Qualifying Tips

In order to qualify for a loan, you have to demonstrate that you can afford to pay back the loan. Lenders require that your debt-to-income ratio shows that you can afford to make the monthly loan payment.

You also have to meet credit requirements, both for credit score and credit history. The best rates on loans are offered to borrowers with excellent credit scores and if your score is below the minimum credit score a lender requires, your application will be turned down.


Get Your Free Credit Report, when Entitled to Receive One

 If a lender turns you down due to something it finds on your credit report, you are entitled to a free copy of your credit report and a letter that explains why you were turned down.

Even if you have a strong credit score, you could be turned down due to your credit history. For example, the presence of a collections account could prevent you from qualifying from a loan, until you can prove the account is paid off. Similarly, you may have to wait X number of years after a bankruptcy discharges, even if your score bounces back more quickly.

Hardship Loan Alternatives

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 providers.

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

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



Get Debt Help!
(42 Votes)

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  • SM
    May, 2014
    Bunnell, FL
    I am on Social Security Disability. My wife went through leukemia and I went through prostate cancer. I am really in debt. I have to pay $850 a month and am $25,000 in debt. I own a manufactured home on an acre and a quarter free and clear. Nobody will do a mortgage on it. I can't get a loan. I don't want to lose my home. What can I do? I don't want my credit to take an astronomical hit, but I am almost to the point of not paying my creditors and storing the cash to try to pay one off, then work on the next, etc. I'm really at my wits end.
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    • BA
      May, 2014
      Steve, you mentioned that you are concerned about your credit rating, but it could be the case that the debts you are carrying have eroded your score, even if you pay your bills on time. You may find yourself in a situation where it makes more sense to prioritize getting out of debt over harming your score further.

      Here are a few suggestions:
      1. Look at the collection exemptions in your state, to see the homestead exemption. It may be that the value of your home is protected from creditors, even if you were to stop paying them, they sued you, and got a judgment against you.
      2. Speak with a bankruptcy attorney. The fastest and cheapest way to get out of debt could be filing for BK, depending again on how much of your home's value is exempt from creditors.
      3. Speak with a reputable debt settlement firm. Debt settlement can offer the fastest way out of debt at the lowest cost, while avoiding bankruptcy. You could also choose, as you suggested, to try to settle accounts on your own.
      4. If it is credit card interest rates that are making it difficult to pay down your debt, you could benefit from a credit counseling firm's debt management plan, though that approach is not likely to greatly reduce your required monthly payment.
      5. Be sure you understand the level of protection that your disability income has. It is almost surely the case that your creditors could not garnish your disability, even with a judgment against you.
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  • KJ
    Mar, 2014
    New York, NY
    please and please for your own good do your research and choose the right loan, not the first loan, you find.
    0 Votes

  • RB
    Oct, 2012
    Las Vegas, NV
    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.
    1 Votes

    • BA
      Oct, 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.
      0 Votes

  • RM
    Feb, 2011
    Old Town, FL
    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.
    0 Votes

    • BA
      Feb, 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.

      0 Votes

  • ET
    Jan, 2011
    Battle Creek, MI
    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 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!!!!!!!!!!!
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    • RK
      Apr, 2011
      Dayton, NV
      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 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.
      0 Votes

    • VM
      Oct, 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!
      0 Votes