Since 1904, the HFLA of Northeast Ohio has provided interest-free loans for individuals with needs that cannot be met by the mainstream lending industry. Our creative approach to relationship lending has allowed us to continuously make sense of our changing world and adapt our offerings accordingly. Most recently, we have made some exciting changes to address needs for debt refinancing and consolidation.

Many in our community find themselves with punishing or unsustainable debt obligations. Personal loans from non-traditional institutions can be accessed online, but with absurdly high interest rates.

This would be the most obvious example. However, even some standard rates and practices, like those found with private student lenders are more than suboptimal. An individual may have felt like they were forced into taking on bad debt because they did not see another path out of their predicament; or they could regret past decisions because they were uninformed about the true ramifications at the time they took on the debt. Learning the hard way is one thing, but some debts are so egregious that no amount of struggle by the individual can meaningfully correct a wrong move.

Our Debt Exchange Loan Program is designed to help individuals strengthen their financial position by trading in overly burdensome interest-bearing debts for an interest-free loan.

This loan can be used to address up to $10k in debts like private student loans (not issued from the government), credit cards, “payday” and other personal loans, and collections accounts. The total amount of such debt held by Northeast Ohioans is much more than HFLA will be able to exchange. As a small non-profit, we are only able to help those who are truly in need. Therefore, good candidates will be able to clearly express a strong need to exchange the debt, have a specific personal financial plan, and show a commitment to the betterment of their financial wellbeing. Working with a partnering financial coach may be a prerequisite to qualify based on an assessment by HFLA staff.

Once the debt is exchanged, individuals will see many immediate and long term benefits that can multiply. First, once the debt is paid off with the original creditor, it will stop accruing interest, which will save the individual money in the long term. Many individuals will see a lower monthly repayment with HFLA, which can free up money in their monthly budget to put towards necessities, other debts, or savings. Whether it is because of a new lower monthly payment or gaining the ability to pay off debt more quickly, some will see an improvement in their debt to income ratio, which can help them access a larger, prime loan that they may need (like a home equity line of credit). For those that exchanged revolving debt (credit cards), they will see an immediate improvement in their credit score as their credit utilization will decrease dramatically. Additionally, HFLA does not necessarily require that revolving accounts that are paid off be closed, so this increase in credit score will last as long as the accounts are kept at a zero dollar balance. Paying off collections accounts can get collections agencies off of your back and can help increase your credit score for some scoring models.

Please call or email our program department to find out how you may be able to qualify and benefit from the Debt Exchange Loan Program. Personal guarantors (outside of a borrower’s household) are required for any loan applicant.

team@interestfree.org

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