4th year Med Student with credit card debt

[SSmarstle89]

So - I'm a 4th year med student. I'm in the US but am a Canadian student. Because Canadian dollar tanked (went from 1:1, to 0.75:1), I've used credit cards a lot to keep money in American. Well - this inevitably built up throughout the years and is now at about 30K - clearly is hurting my credit. My credit score is still in the 600s. I'm trying to take out a personal loan or something of the likes, pay off a good portion of my credit card debt, because being maxed out on my credit cards is the biggest thing hurting my credit, so I'm trying to spread it out. Unfortunately, banks aren't very willing to help me out due to my credit, debt:income ratio. Any ideas on how to get a personal loan (i.e., a loan that I could transfer my debt to, and just pay $500-$600 monthly payments on). Silver lining is that the 30K in credit card debt is my only debt. Thanks for any suggestions!

[jfoxcpacfp]

Hi,  SSmarstle89 - just wanted to let you know that I deleted your duplicated post. That sometimes happens when the system runs a bit slow.

Is a family loan a possibility? You might also try a P2P lending company such as Lending Club, although I'm not sure that you'll improve your interest rate any.

[MaxPower]

Is it possible for you to take out a federal student loan and then use that money to pay off the credit card? At least that way you'd have the option if deferment or forbearance. And if you really have no student loan debt, taking $30k out won't be hard to pay off at all later.

[SSmarstle89]

Unfortunately can't get federal loans (not able in the US or Canada). Can't do a family loan. I've tried on lendingtree, but I there don't seem to be any offers because of my debt. And yes, I have no student loans, just the 30k in credit card debt. Is there any way to ask doctors/other wealthy people directly that would be willing to do a personal contract? I'd pay compound interest and pay it off in 4 years max, making monthly payments. Any other ideas? Thanks

[DMFA]

My lord. I don't want to seem insulting or condescending in the least, but a very important first step in fixing any problem is understanding the process that led to it. Again, I have no idea if this was poor decision-making on your behalf or not, but you should look very closely at how this situation developed and how you can avoid it again. Either way, it is a very, very lousy situation and I am very sorry for you that you're in it.

That aside, there are two common pathways for this: a personal loan, like from SoFi or Lending Tree (might be hard to get accepted if you're a student), or credit card balance transfers. There are many cards which offer introductory periods at 0%, some for as long as a year. The issue with you, though, presumably having no income, is that credit limits will be low (meaning you'd need multiple cards) and debt/income ratio is basically Ø (undefined), like you said. Afaik, this is what Dr. Wise Money (Amanda Liu, bless her memory) did for a lot of her debt, just played CC roulette with balance transfers once the introductory 0% period ended.

If you have few options, there are some "debt relief" lenders that give fairly predatory deals to consolidate CC debts with low monthly payments. These are usually a last resort since they often involve accruing/capitalizing interest that isn't being paid up front, resulting in a pretty high debt.

Good luck. I really hope everything goes okay. In the end, when you are a high-earning professional, the interest on $30,000 will hopefully only have been a temporary nuisance. If you make good decisions from here on out and manage this well, then you can be reasonably optimistic about the outcome of this bad situation.

[paramount]

Pay the minimum, then once you become a resident, crush the debt.

You made a poor financial decision and you should learn from it.

[WallStreetPhysician]

SSmarstle89 wrote:

So – I’m a 4th year med student. I’m in the US but am a Canadian student. Because Canadian dollar tanked (went from 1:1, to 0.75:1), I’ve used credit cards a lot to keep money in American. Well – this inevitably built up throughout the years and is now at about 30K – clearly is hurting my credit. My credit score is still in the 600s. I’m trying to take out a personal loan or something of the likes, pay off a good portion of my credit card debt, because being maxed out on my credit cards is the biggest thing hurting my credit, so I’m trying to spread it out. Unfortunately, banks aren’t very willing to help me out due to my credit, debt:income ratio. Any ideas on how to get a personal loan (i.e., a loan that I could transfer my debt to, and just pay $500-$600 monthly payments on). Silver lining is that the 30K in credit card debt is my only debt. Thanks for any suggestions!

Click to expand...

It looks like you got some great responses from the WCI community (the OP initially contacted me via my blog for advice and I sent him here). Obviously a personal loan from a family/friend would be the best option. "Refinancing" your credit card debt via balance transfers would be your next best bet in the short-term (see the guest post by Dr. Amanda Liu on WCI for details). You could also try peer-to-peer platforms as Johanna had suggested.

The most important thing is to learn your lesson about the perils of credit card debt and to pay it off as fast as possible once you become an intern.

-WSP

 

[SSmarstle89]

Thanks very much for all the replies. Very helpful. First of all - yes, lesson learned x1000 - it was a huge mistake and I will never make it again and likely will get rid of all my credit cards after this.

I think my plan is:

1) Ask a couple close friends (with jobs) for small loans (perhaps two people for 5k each, 2 year repayment plan with compound interest). This way, I can at least get my credit debt a little lower so it hurts my credit score a little less, and they make a little money. I'll be a poor intern but I've earned that.

-The "credit transfer" idea is a good idea that I've explored, but my credit score and debt are bad enough that I'm not able to qualify for another credit card, especially not one with 0% APR for any period of time. The peer-to-peer lending sites don't seem to offer me anything - I'm guessing my score is too low.

2) Transfer some of my credit card debt to my Canadian credit card, so that it's not affecting my US credit score. This would only be for about 4k.

3) Get a friend in Canada to put some of my debt on his credit card, and pay him back monthly - for the same reason.

What a mess. However, I think it's worth the added effort to spread out my credit card debt so it doesn't continue to kill my credit. I've learned the hard way that a bad credit score is a downward spiral. Debt begets more debt, and a bad credit score greatly hinders your ability to pay off debt more easily.

If any other suggestions let me know. Thanks again.

[adventure]

SSmarstle89 -

You're here, good work asking around for advice. Also, congrats on being almost done with med school!

MS4, right? Do you have residency lined up? (I'll assume yes).  Have you made a budget for the rest of this year, and residency? When do you expect to stop being a student? How much of a gap, if any do you have between MS4, and PGY1? Do you have to move? Do you expect to have significant expenses to get ready for residency? Do you have plans to get a residency "moving" loan? Are you set with a house? Emergency fund? Etc?

Once you have a budget for residency, you'll have a better sense of how much "you can live like a resident", and see if you have extra funds to deal with the debt, starting in July. (Or August, depending on when they first pay you!).

I think you should have a budget, (some WCI posts/info here and here). You should have an idea of how long it'd take to pay off the debt in residency.

Before you do this:

SSmarstle89 wrote:

Thanks very much for all the replies. Very helpful. First of all – yes, lesson learned x1000 – it was a huge mistake and I will never make it again and likely will get rid of all my credit cards after this. I think my plan is: 1) Ask a couple close friends (with jobs) for small loans (perhaps two people for 5k each, 2 year repayment plan with compound interest). This way, I can at least get my credit debt a little lower so it hurts my credit score a little less, and they make a little money. I’ll be a poor intern but I’ve earned that.

Click to expand...

You should have a clear plan for digging your self out. As my boss says, don't bring me problems. Bring me a solution. Also, once you have a clear picture of this (some excel spreadhseets will do), you can better show your situation (as you would have to for any mortgage/loan, etc), and show an example of how much you need from friend #1, when you can pay them back (you need the budget to help with cash flow here...), and what terms they can expect.

 

[jfoxcpacfp]

SSmarstle89 wrote:

I’ll be a poor intern but I’ve earned that.

Click to expand...

I think you've started on a workable plan. Better to be a poor intern now than a poor attending asking these same questions later. Good luck!

[SSmarstle89]

I actually just became a 4th year, I'm on a slightly different schedule due to some research. So I'll be matching in 2018, hopefully into Diagnostic Rads if all goes well. Hoping to stay local.

I will certainly work on ironing out my budget and repayment plan.

[StarTrekDoc]

Since you're in for another year,  check with your Financial counselor to see if they have any options available.  Some MedSchools have deep donor pockets to assist on something like this if you have a good character and lessons learned story for the donor to latch onto.