Hey everyone. I need some serious advice. I’m 22 and just finished college, but I’ve made some bad choices and now I’m deep in debt. I want to get my life together and manage my money better. Here’s what I’m dealing with:
Capital One Credit Card: $1,500
Credit One (1st): $650
Credit One (2nd): $700
Mercury Credit: $1,500
Discover: $3,500
On top of this, I got a car that I couldn’t really afford. My parents insisted on a new one and promised to help, but now I’m behind by two months, and it might get repossessed soon. I owe $600 a month for it.
My student loans? $80,000. I want to focus on paying off the credit cards first since I can deal with the student loans later if I have any money left after the credit cards.
Any tips on how I can get ahead here? I’ve only missed one credit card payment so far, but I’m starting to feel like I’m in over my head. Thanks for your advice.
You might want to skip your credit card payments for a month to catch up on the car. If your credit score isn’t too damaged yet, look into a consolidation loan to combine your debts. That can give you a break before having to pay, helping you avoid repossession.
Not ideal, but you can make a few hundred bucks a month selling plasma. And maybe think about the military—4 years and they cover your student loans. Most jobs aren’t combat-related, especially in the Air Force.
Don’t forget the soldiers’ and sailors’ relief act if you do go that route.
Try asking your credit card companies for a hardship program. They might reduce your interest rates or even close the accounts. For your car, once you’re behind by three months, it’ll likely get repossessed. That happened to my husband once—his car got sold at auction, and they wanted him to pay the difference. He ignored it, and nothing happened, but it stayed on his credit report for years. You could also look into deferment or reduced payments for your student loans, depending on your income.
I’ve checked with all my credit card companies, and none of them are offering me any hardship programs, which feels unfair. I can handle minimum payments, but I want to make real progress. I’m two months behind on my car, and they’ve already sent me a letter saying I have until the 16th to pay or they’ll take it.
Did your husband just ignore the payment they wanted after the auction? Can they take legal action if I do the same?
I’m also looking into deferring my student loans. Thanks for the tips!
They sent us a letter saying the car sold for $7,000, and they wanted us to pay another $7,000 as a lump sum. We didn’t have the car anymore, so we didn’t see why we should pay. Nothing happened, and it dropped off the credit report after some time.
Just be careful though. I wouldn’t assume they’ll forget about it. Try to find out exactly what they’ll expect from you after the repo.
That’s how it works with repossession. If you don’t pay the remaining balance, it stays on your credit report as an open repo. You won’t be able to get another car loan until that’s sorted out, and a cosigner would be affected too. You owe the bank the amount left after they sold the car, and they can come after you for it.
Thankfully, there was no cosigner, so we only dealt with our own credit issues. They never came after us for the remaining balance, and it eventually fell off the credit report. We ended up buying a cheap car off Craigslist and got by with one car for years until we paid off another one in 2017.
It was supposed to be no money down, but they took the gap insurance payment (about $1,000 to $3,000) and counted that as a down payment, so technically, yeah.