What is better for the long run…. Debt settlement or repossesion of 2 brand new cars?? :(?
Im in a dilema… With the economy the way it is, I am forced to make a decission i have been dreading for awhile. I need to know what is easier, less affecting, towards the credit and future.. Debt settlement, Bankruptcy, or repossession of 2 brand new cars!! 
Posted October 12th, 2009 in Debt Settlement. Tagged: bankruptcy, brand new cars, Debt Settlement, decission, dilema, economy, repossession.
Repo and BK will cost you way too many years of your life. Both stay active on your credit report for 7 years. Then you have to rebuild your credit with credit cards that have outrageous APRs, make every payment on time and be sure you never exceed 30% of your credit limits at any time. Then try to get something else bought on time and again, make every payment on time.
Do this for about 2 years to show you’ve rebuilt your credit and you’re no longer a high risk. You might be able to get a cheap used car on credit. Keep that loan in good standing for a year and then you should be good to buy something newer and better. Maybe even a new compact. But not much more than that.
Most people have the wrong impression about BKs and repos. They think that 7 years after the BK was discharged or 7 years after you paid off the remaining repo balance owed on your cars, after they were sold at auction, that your credit history is clean and you can once again get anything you want. That’s a dangerous myth.
A BK or repo can stay on your credit history for up to 10 years, even though it’s inactive for the final 3 years. If you’re fortunate to have it wiped off sooner, your credit report will still give you away. It shows how many years your credit has been reported. If a finance manager sees your history is 15 years deep but you only show a year or two of current active history (since you couldn’t finance anything while the BK or repo was in active status), that’s a red flag. We know you had serious problems. Your FICO score will also tell us that too. You can’t hide either one from us.
So that leaves debt settlement. This can cost you a lot less than all your current payments together or almost as much, depending on what the company can negotiate with your creditors. If it’s the same or close to it, you’re still buried. You’re only choice is to BK. A repo will leave you still owing a balance on both cars once they’re sold. And a noncollectible debt along with 2 repos is the kiss of death. That will take even longer to get completely over.
Keep in mind, while you’re going through debt settlement, this will show up on your credit report until all of your debts are paid off. While it’s on there, you will not be able to finance anything. It freezes your credit and dumps your score. But once it is all paid off, you can write to the 3 agencies and have them expunge it from your record. You’ll have to bebuild your credit again. But at least it doesn’t take as long as a BK or repo. And it shows you didn’t take down any creditors. You paid your debts, albiet in settlement amounts.
Final word of caution, before you engage any debt settlement company, check them out thorougly. There are a lot of predator companies who will leave you worse off than before. Do your research before you pick up the phone.
October 12th, 2009 at 11:52 pmIf the car is repoed you are still responsible for paying those loans regardless of what happens to the car. Secondly Bankruptcy i hate to say it is the better route to follow. I know it won’t come off for seven years, but its better than debt settlement where you’ll be making some huge monthly payment during the year. It just means surviving on cash for seven years, and saving like you have no common sense.
October 12th, 2009 at 11:52 pmYou tell us.
I go for whichever term calls for selling two new cars for what you can get and getting a loan to pay off the difference.
Good luck.
October 12th, 2009 at 11:52 pm