Debt is a problem for many. Trying to resolve it can be daunting, confusing and intimidating. And, for one member, very complicated. Fortunately, Truliant was here to help.
For Hung Le – who escaped by boat from Vietnam in 1979 to flee the Communist government, went to Malaysia and then was sponsored for immigration to the U.S. — the problems of debt and finding a solution magnified.
Le, who lives in High Point, works as a spray painter for Allen Industries in Greensboro. About 30 years ago he became a member of Truliant Federal Credit Union in Greensboro “because it’s easier to deal with Truliant than other banks,” Le, 61, said. Le and his wife, Nam, have been married 40 years and have three children: Thanh, 37; Jason, 30; and Jennifer, 26.
In May, Le (pictured in this blog) and his wife, who works as a nail technician in Winston-Salem, realized that they had a serious debt problem.
“He walked into our Truliant branch in High Point,” said Danielle Dale, a member service specialist. “He told me he needed a way to consolidate some of his bills. The family was drowning in debt.”
Drowning isn’t an exaggeration. Here are some of the details:
- $26,000 in credit card debt
- $18,000 auto loan debt
- $86,000 remaining on their mortgage
Their income-to-debt ratio was 80%.
In this case, an income-to-debt ratio of 80% means that 80% of their income was being used to pay their debts – which didn’t include food, gas, utilities and other monthly expenses.
Financial institutions sometimes cap lendable debt-income ratios at 43%. And while part of this ratio was the result of co-signing for two auto loans for their children, the problem was serious.
“The first time I talked to Danielle, I asked about refinancing our mortgage,” Le said. “But she told me that would have $4,000 or $5,000 in closing costs. I asked her if there was a better way.”
One of the services that Truliant offers members is a No-Cost Credit Review
. According to Dale, there was a “huge hiccup” when they got the results of the review.
“Mr. Le had two Social Security numbers,” Dale said. “When we pulled the two credit reports, some of the items were split between the two numbers.”
In Le’s case, there wasn’t a logical explanation as to how this happened. However, the Social Security number had to be resolved before anything else could be done.
“Before we could look at any loans to help the Le’s situation, we had to merge his Social Security numbers through Equifax,” Dale said. “So I helped Mr. Le write a letter that explained the problem. We had to send a copy of his correct Social Security number and a copy of his driver’s license. It took two months before they were able to merge the two numbers.
“For a few weeks, Mr. Le was in the branch every day. It was much easier for us to work through this process in person rather than on the phone,” Dale said.
With the Social Security issue resolved, Dale was able to study the credit review. “Essentially, we looked at all avenues,” Dale said. Her first thought was to do a second lien on the mortgage and just pay off the credit cards, but that would have left the debt-to-income ratio too high.
She determined that the best solution was a Home Equity Line of Credit (HELOC), which carried a much lower rate of interest.
“I told her ‘Let’s try it and see what it looks like,’” Le said.
With a HELOC, the Le’s were able to:
- Pay off their credit card debt
- Pay off their auto loan
- Pay off their mortgage
- Consolidate all their debt payments into one monthly payment
- Save $1,600 a month – over $19,000 a year – in debt payment.
As a result, the Le’s were able cut their debt-to-income ratio nearly in half, to 42.8%.With Truliant’s help, these members were able to take control of their finances and save thousands each year.
Need help with debt consolidation? Set an appointment to speak with one of our specialsits at truliant.org/locations
. Or visit our debt consolidation page
to learn more.