Input on credit solution?

[Anonymous]

Hi. Im hoping to get some input on an idea I have. I am 26 years old, I have about $16k in credit card debt. A few years ago I was in a bad place and used spending as an outlet to make me happy. About 6 months ago I enrolled in a debt consolidation program so I had to let all my accounts go past due to go into collections in order to settle them. I eventually cancelled the program because they were not communicating with me. So now I am in a situation where I have most of my accounts that have been bought by a collection agency. My credit was never good but lack of payments and collections has taken my credit to below 500. I am no longer in a place to get approved for any kind of consolidation loan or any loan for that matter. I also dont have family who could loan me or co sign for a loan in case anyone asks. I thought of the idea of getting someone to privately loan me the amount to pay off all these accounts and arrange to pay them directly in one set amount. This was my credit will be cleared and can begin to rebuild itself. Maybe an investor out there who has money set aside they could invest at a rate that is higher than what a savings account would pay them. I have a pretty new car to put as collateral in a contract. Any input on this idea and maybe some one knows where to look for this particular setup?

[Remedios]

Hi and welcome to the forums

I have a question...if you "had to let go of your accounts" only six months ago, how did you end up with a "pretty new car"?

Those two statements are really incongruent.

I'd suggest you sell the car, buy an older vehicle that has a couple of years left and pay your debts.
Later on when your financial habits improve and your finances are in a better place, you can start thinking about luxury items, such as pretty new cars.

[Anonymous]

Hi Remedios, 

Let me specify... I am looking for HELPFUL input not snarky and judgemental comments about the status of my car. Thanks pal

[Brian_Earl_Spilner]

She's not wrong. If it's a pretty new car, it probably has a loan on it and can't be put up for collateral. If it's paid off, it should be sold for something cheaper that's paid off as well. The excess funds can be used to pay down your debt. 

[GApeachy]

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@Anonymous 

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Are you by any chance self employed?  

[Anonymous]

Are the collections calling you?

Are they asking for full amount only?

If you can settle for less than full with the collections, do that over time.

If it is "in house" collections, as in the credit card company calling you, more than likely they will not take less.

SO it would not be feasible at this time.

Otherwise save as much as you can each month (this will require lots of work on your part) and

then start by paying off in full the lowest collection and then keep going.

Help speed up time by getting a second, third and even fourth job and busting your @$$ to get it done.

Your score is going to require YEARS to recover,

with all the late payments and such....it will go up slowly over time.

Start reading the "rebuilding your credit" subforum here, it will help

https://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/bd-p/rebuildingcredit

ohh, and the car? it may be pretty to you, but in the credit world, it is a depriciating liability that

is ONLY costing you money each month, not worth it to anyone unless you sell.

hth

[Anonymous]

Thanks for the input. And yes they are in collections through a third party. And to clarify on the car, when I said pretty new car I’m meaning a 2017 Nissan Sentra because I didn’t know if that can be used as collateral. I did not mean pretty new car in the sense of she’s a beauty. That should clear some things up

[privacyadvocate69]

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@Anonymous wrote:

Let me specify... I am looking for HELPFUL input not snarky and judgemental comments about the status of my car. Thanks pal

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From the OP, it sounds like you are looking for someone willing to offer high-risk loan (to a person with a sub 500 FICO score and outstanding collections) for a low interest rate (something better than a savings account).  That seems unlikely.

Such a person could invest their cash in an S&P index fund.  Certainly that is no more risky than an unsecured personal loan to someone with bad credit.  However, the average return is 10%. So, a lot less risk, a lot more return.  See the issue here?

Having a car as collatoral is nice, but it isn't really attractive to an investor who is not in the business of making car loans.  They're not going to be set up for repossession, or frankly, want to bother with the risk of having to repossess, when the easy 10% in an S&P Index Fund is available. 

[Anonymous]

I feel like the damage to your credit has been done, so at this point I'd stockpile money to have on hand in case you get sued and be ready to settle for a fraction of the debts if/when the time comes.

I don't think anybody meant to be snarky, but an almost new car is in fact a luxury for someone with financial problems. (and there are literally millions of Americans in this camp . . we're almost brainwashed into it by default.)

[SEAlifer]

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@Remedios wrote:
Hi and welcome to the forums

I have a question...if you "had to let go of your accounts" only six months ago, how did you end up with a "pretty new car"?

Those two statements are really incongruent.

I'd suggest you sell the car, buy an older vehicle that has a couple of years left and pay your debts.
Later on when your financial habits improve and your finances are in a better place, you can start thinking about luxury items, such as pretty new cars.

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+1