Auto Repo & Public Record

[sierra1013]

I had a vehicle voluntarily surrendered in 2010.  I was sent a default letter and it was filed with the local court.  A mediator was able to make a payment plan to settle the situation ($500 down, $75 a month until the total was paid).  If payments were made faithfully, no legal action would be taken.  I have been paying on time every month.  I contacted the office to inquire into a settlement offer and was told that I still owed $4600 to pay out the account. (Original breakdown:  $4650 for the vehicle, add interest and fees and the total came to roughly $8000).   In the three years that I have paid on my account ($500 down, $75 a month), I managed to pay $3300, however, I am finding out that very little of that was put towards my principle.  I made an offer of $2100 to settle my account.  My counter offer was to pay out the principle of $3262 and my account would be settled.  My question is, do I try to negotiate a lower settlement offer or do I pay the $3262 since this default was recorded at the courthouse to avoid any further legal issues?  Also, if I pay out the principle, will this settlement help my credit score?

Any help is greatly appreciated since I am hoping to buy a home by the end of the year.

[guiness56]

Paying it won't help your score at all.

But, if you settle and they agree, make sure they say it will not be entered on your CR.  Get that in writing.  Attorneys can be not so nice.

I would start with what you can afford and leave room to go higher if they decline your offer.

ETA:  I was talking about paying a judgment would not help your score.  Since an autoloan is an installment account if plays a very small role, maybe 10%, in your score.  Paying it off or settling will not have much impact on your score.  Lenders may look at the settlement in a negative light.

[sierra1013]

What do you mean that lenders will look at the settlement in a negative light?   So should I keep making the monthly payments as opposed to paying the settlement off in one lump sum?  If they tell me that they would settle for the principle amount of $3262, do I still have room to negotiate a lower settlement payment?

[guiness56]

I mean that a settled account is looked at negatively by lenders.  It makes you more of a risk to extend credit to.

You can negotiate whatever you feel you can pay.  Paying it in payments or one lump sum isn't going to matter.