Can I Consolidate My Credit Cards Without Being Employed?

Sometimes when a person is in debt, one of the ways that he will seek to get out of debt is to consolidate his loans. This happens when the debtor takes all of his loans to a lender who buys them and gives him a new loan covering them all. While this option is available to many debtors, it can be harder if the person is unemployed.

Debt Consolidation

When a person has debts he is paying off to multiple creditors, he will often choose to simplify his payments by having a new lender pay off his outstanding balances and provide him a new loan. Not only will this simplify his payment schedule -- he is now required to pay one creditor instead of many -- but, in some cases, it can lower his monthly payment. However, a person must first qualify for the loan.

Unemployment

Unemployment can make the attainment of a debt consolidation loan difficult. This is because a lender may be unwilling to lend to a person who does not have a steady source of income. Even if the person is receiving unemployment benefits, these benefits are a fraction of his normal salary and only last for a short period of time. This can make the person an unattractive candidate for a loan.

Eligibility

However, there are a number of other criteria that a lender should use when deciding whether to let a person take out a debt consolidation loan. These include the person's credit rating as well as the assets that he has in the bank and which he can apply to meet his monthly payments in a pinch. Each lender will use a different method of assessing a borrower's eligibility with different weight given to salary.

Considerations

A person should think long and hard before consolidating his debt. While consolidating debt can be a smart move for some, it can also lead to an increase in the person's total debt load, as the new lender takes on fees and potentially higher interest rates. In addition, according to Bankrate.com, many people who consolidate debts will feel free to take out more credit, hiking up their debt quickly in the process.