I have negative equity of about 8k on a capital one auto loan that I got back in mid 2012. Due to going from a dual income to a single income household I have been unable to pay my car note for over a year. The only reason Capital one has not repossessed my vehicle is because their SCRA (Service members Civil Relief Act) department has told me my account is protected under that Act and my vehicle will never be in danger of repossession. That is a relief and I am very fortunate but I would like to somehow fix this for my credits sake. The account shows that its charged off on my credit report. Does anyone have any ideas that could help me. I have a cousin who can afford give me the 8k to pay off the vehicle but he said if he was in my situation he would just put away the payment amount into a savings account each month instead of paying on the vehicle and then when I have reached a substantial amount (7 or 8k) call them and ask for a settlement. Since I recently got a raise I am able to put away 194 dollars a paycheck to do this but it still only hurts my score the longer it goes unpaid. I called Capital One's SCRA deparmtnet and asked if I could make a substantial payment like $1500 to bring my account current but they said the entire amount of 7642.00 would need to be paid. This is the only thing on my credit that I have not fixed since I've started rebuilding 3 years ago and obvioulsy its a big issue. I have been paying my credit cards and even went through student loan rehabilitation and paid off all my collections and now I really want to tackle this. Can anyone offer any advice?
Starting Score: 549
Do you think I could do the PFD with a lower amount than 8k just to bring my account current along with a promise to continue paying on time?
@Anonymous wrote:First , thank you for your service to our country. I am not an attorney nor really an expert but I have read a ton on credit and rights over the past months that I have been working to rebuild. You have some real advantages in this situation, of course your protection from repossesion is the biggest. I would not borrow money to pay off this debt, the damage is really already done to your credit, paying them off in full will not make the damage go away. You can call them and negotiate a reduced amount in return for them showing the debt settled but you need to know that you run the risk of prolonging the time that this shows on your credit report because if you start making payments on the debt and then stop due to a hardship you reset your 6 years and 6 months of DOFD. It can't hurt to call but I would not commit to anything until you have a chance to reflect, they have already charged off the balance due and are not repossessing. When I served the protection I had against creditors only applied while I was depolyed for desert storm, not sure if that is true still but you certainly don't want to give them any information that would trigger the removal of that protection. This may be a case worthy of spending 100 bucks or so for a legal consult if you can't find a free legal aid office to help you. I am kind of thinking outloud as I am typing here but I think I would seek legal advice before doing anything. No sense in causing a new problem trying to resolve an old one.
Make sure you pull your credit report and work on any issues you can to bump your score up, you need a couple of credit cards even if they are secured, NFCU is excellent to deal with so you might want to consider them. You have three years since the charge off so you should be able to recover your scores to the mid 600's if you clean a few things up and have some good trade lines.
Let us know how this goes
Thank you so much for your reply. My score is currently going up each month the more I pay off my credit cards so even though this auto loan is affecting my score, its not keeping me from improving it which is a good thing.
@guydiver wrote:
@Anonymous wrote:Unless you have no other choice but to get a new car there is no chance I would roll 8k of negative equity into a car loan. It is none of my business but you are recovering from a BK, rolling a bunch of negative equity into a car loan is not a good choice, the fact is you won't get to a point that you have equity and you almost certainly will end up in the same situation in a couple of years. I speak from experience in this regard and learned the hard way. If you have a car that runs I would work on getting the 8k down to even before you do anything. You won't find anyone that will give you decent terms if you are dragging that amount of negative equity into the deal, you could look for a car with a huge rebate but the reality is that cars with big rebates end up having terrible resale values so you might get it financed but you will still be upside down. Personally I wouldn't buy until I got into a better situation.
+1.
8K in negative equity is not where you want to be getting into another vehicle. Remember, you won't only be paying interest on the new vehicle, you'll be paying that same interest(probably rediculous rate) on the 8K you were upside down! It's a lose-lose situation. You will be upside down for the vast majority of the loan, if not forever.
'diver
I guess I must have conveyed something wrong somewhere because I have no plans to get a new vehicle or trade this one I'm behind on it. Most places won't take a vehicle if your that far upsoide down unless you can match the amount your upside down on. I've been there and done that.
@guydiver wrote:
@ch8ngeurstars wrote:
@guydiver wrote:
@Anonymous wrote:Unless you have no other choice but to get a new car there is no chance I would roll 8k of negative equity into a car loan. It is none of my business but you are recovering from a BK, rolling a bunch of negative equity into a car loan is not a good choice, the fact is you won't get to a point that you have equity and you almost certainly will end up in the same situation in a couple of years. I speak from experience in this regard and learned the hard way. If you have a car that runs I would work on getting the 8k down to even before you do anything. You won't find anyone that will give you decent terms if you are dragging that amount of negative equity into the deal, you could look for a car with a huge rebate but the reality is that cars with big rebates end up having terrible resale values so you might get it financed but you will still be upside down. Personally I wouldn't buy until I got into a better situation.
+1.
8K in negative equity is not where you want to be getting into another vehicle. Remember, you won't only be paying interest on the new vehicle, you'll be paying that same interest(probably rediculous rate) on the 8K you were upside down! It's a lose-lose situation. You will be upside down for the vast majority of the loan, if not forever.
'diver
Most places won't take a vehicle if your that far upsoide down unless you can match the amount your upside dowI guess I must have conveyed something wrong somewhere because I have no plans to get a new vehicle or trade this one I'm behind on it. n on. I've been there and done that.
OK> My bad. Whenever someone is talking about negative equity, it usually means they are trying to trade, or figure out how to get out of the vehicle they are in. Apologies, I read it wrong. I hope everything works out for you. Thank You for your service. Sorry I forgot that also.
No WOroNo worries, I should have been more clear in my original quote and said I'm almost 8k past due on this auto loan instead of saying i have 8k of negative equity. Anyway I appreciate you taking the time out to offer your advice. You have the type of scores I am shooting for so I'm willing to take all the advice I can from people like you because clearly your doing something right. The hardest thing about all of this is time and patience. Since I've started trying to rebuild my score has risen almost 200 pts depending on which score your looking at but I still have a ways to go. My experian score is finally in the "600's". I havent had a score in the 600's since 2003 so that made me feel great. Anyway, I'm starting to ramble. Thanks again and I'll update here when something changes