Financial Advice

[AWDthis]

I need some opinions on what I should do about my current situation, let me explain. My parents did a bankruptcy, I was a co-signer in their 2 cars, so my credit cards said "Oh snap this dude is going to screw us" and they reduced my credit limit to within a few hundred bucks of what I currently owe, so now my credit is 90+ % useage thus lowering it like no tomorrow. Im currently paying 398.50$ on 11.5% on my car, Im wondering if I can call State Farm Bank and tell them im not going to be able to make the payment and try to work some kind of deal out where they lower my payment, idk if they do this or not, that way I can throw that extra money towards the credit cards? Because right now...im not getting no where with them What do you guys think?

 

[Kain]

... My parents did a bankruptcy...

... I was a co-signer in their 2 cars...

... Im currently paying 398.50$ on 11.5% on my car...

Nice.

Here's your prob. Your credit is probably s*** judging from the % on the auto lien, and depending on the type of bankruptcy your parents are filing, the two cars that you co-signed could also go into default. To top that off, lending institutions are facing the worst crisis in 80 years, mostly due to high risk in the sub-prime market (in which you belong), so they are calling in loans and hording whatever bailout money they stole from the TARP plan.


Cliff's Notes: fire up the flux capacitor, go back in time 5 years, and don't overextend yourself

 

[dizzin9]

the basics: save money, pay off your bills, and work on your credit...

or worse, sell the ms3.

 

[Psycho_Maz]

Ouch. There is no real nice way to get out of your situation, unless you can find a way to make more money. Got to be realistic. First, cut all your credit cards up. If you need credit cards to live month to month then you are living way above your means.
I would pay off the highest % balances first while still making at least the minimum amounts on your other credit accounts. Avoid any 30-60-90 day late problems on your credit since that will further hurt your credit rating.
Never co-sign a loan for anyone, especially family. If you ever need to help your family again I would offer to give them money, and not your credit rating. And, if you give them money, just consider it a gift and never expect to get it back.
Calling the bank and your other creditor is a great idea. Most of these organizations would rather get some $ than nothing at all, and may be willing to work with you through a tough time. It never hurts to ask and doing NOTHING will only make it worse.
You put yourself in a very tough situation, so good luck.

 

[hilmar2k]

Couple of questions:

1. Are the car loans being reaffirmed, or did your parents turn the cars in?
2. How has the payment history been on those car loans prior to the BK?
3. How has the payment history been on your accounts?

Your parents' BK will not directly affect your credit, regardless of whether or not you co-signed loans for them. The payment history on the loans for which you co-signed, however, will. If the loans are current, and your parents reaffirm them, then your credit should be unaffected.

I am happy to answer any questions regarding your credit that you may have. Feel free to ask me directly. I know credit really well (been in the mortgage industry for years and also own a credit repair company).

 

[robin2660]

<snip>First, cut all your credit cards up. If you need credit cards to live month to month then you are living way above your means. <snip> Calling the bank and your other creditor is a great idea.

Yeah, call the multiple credit card companies and cut them to one, for sure.
I also second the idea to simply communicate your intent to the creditors.

 

[AWDthis]

Im glad you guys are willing to help, I never thought co-signing for parents would screw me this bad lol...ouch...anyways heres the whole story. My parents were the sole financers of my car since like 4 years back, I was giving them the money but the car was in their name, so now they went into a tight spot they asked me for help. They filed a Chapter 7 and they took everything BUT the home. I then co-signed 2 cars for them so they can have some sort of transportation because they could not get them financed and then bought the speed3 but this was before the BK was finalized so then they started citing all of us to BK court for those cars too even tho we kept them and kept making payments, never missed a payment or been late in my whole history. But then for some reason all my credit limits dropped and they only left me with like $100 over the limit obviously this affects my credit rating the most, im now at like 590 score. Now like most people Im not making as much as I used to, but If I can lower my car payment which is my biggest single monthly payment of any kind id be able to put some towards the CC. My biggest concern is if I call the bank and tell them I cannot make the payment will they mess up my credit score?

 

[hilmar2k]

My biggest concern is if I call the bank and tell them I cannot make the payment will they mess up my credit score?

No, there is nothing negative that can come from calling and asking for them to reduce your rate. The worst thing that can happen (and the most likely) is for them to say "no".

 

[Circle9]

You're best bet is to sell the Speed3 and get an older car to drive around. Cut out/down on eating out, cable TV, high speed internet, and other entertainment related costs, like car modifications. You'd be amazed how those all add up.

My motto is "Don't spend what you don't have in your bank account" On top of that, I keep a "s*** happens" reserve in my savings.

 

[AWDthis]

So they cannot hurt my credit if i call and tell them "Hey I lost my job I cannot make my payments, Im a student, lets work something out?"

 

[hilmar2k]

So they cannot hurt my credit if i call and tell them "Hey I lost my job I cannot make my payments, Im a student, lets work something out?"

No. The only thing that a creditor reports to the credit bureaus are the account details:

1. Date opened
2. Date of last activity
3. Type of account
4. Acct number
5. Balance
6. Payment amount
7. Payment history

Any financial predicament you may have will work its way to your credit score through your payment history and your balance as a proportion of limit on your revolving accounts.

 

[08cosmic3]

You're best bet is to sell the Speed3 and get an older car to drive around. Cut out/down on eating out, cable TV, high speed internet, and other entertainment related costs, like car modifications. You'd be amazed how those all add up.

My motto is "Don't spend what you don't have in your bank account" On top of that, I keep a "s*** happens" reserve in my savings.

Like he said. It's time to get an old car and get out of debt. Get a second job if need be.

 

[AWDthis]

Like he said. It's time to get an old car and get out of debt. Get a second job if need be.

Im not getting rid of the Speed3 , its either lifestyle which is really only car mods because my life consists of work-school-work, or just not paying down my debt. I can actually make my payments, tight but i can make them, I just want to see if i can lower my car payments, or any of my other payments so i can pour some money into my debt, i also have a little stash of cash under my bed incase something happens, but ofcourse thats incase something happens i dont wanna touch that, if i touch that i can actually pay all of my credit debt, which is under 4k$ but I wanna keep it there. I guess maybe im asking for too much and should just keep paying minimum but i always thought being proactive is better than just getting by.

 

[nate0123]

I recommend a first gen miata. So much fun, you'll forget how little you paid.

 

[08cosmic3]

11.5 % on a car loan is robbery. I pay 4.9 percent and I should have held out and got it lower. If you can get a refinance to a lower rate your payment will go down but with your credit rating in the trash that may not be possible. Pay off your credit cards even if it means using your reserve. The money you would pay every month on the cards put back to build up the reserve. Keep the MS3 but cut everywhere else. Get a rich girlfriend.

 

[Nliiitend1]

Hell, my CREDIT CARD has a lower interest rate than your car loan...

Use your "reserve" to pay down as much of the highest interest debt that you can. There's no point in having it sit around doing nothing for you when you're racking up interest fees out the wahzoo.

 

[jred321]

should just keep paying minimum

paying minimum on what? your credit cards? if you're doing that then you're a moron. your credit card debt should not exist. you should be putting every extra cent you have towards that and get that paid down ASAP. as someone mentioned - cut them up, pay them down, and as soon as you can cancel them. this is probably something you've never been told but CREDIT CARD DEBT IS NOT OK. a great way to get everything paid down quickly is to eliminate your big expenses, like your car. granted if you financed your car at 11.5% you probably owe way more than it's worth at this point so selling it would still leave you owing money. remember this: a nice car is a luxury item. when times get tough that means it's one of the first things to go

you hear on the news how america is getting a "reality check?" this is yours. you've been living beyond your means. the bank didn't cut your credit back because of the bankruptcy. they cut your credit back because you have too much and have proven it. the bankruptcy may have triggered it but it isn't the cause.

i say
1) sell your car and buy one you can pay cash with
2) cut back any other extra expenditures
3) all of the money that was formerly going to your car and other random unnecessary stuff put towards your credit cards
4) once you have your credit cards paid off, pay off all other remaining debts
5) put money into a savings account until you get $10k+
6) once you have some comfort money look for a house
7) once you have a house and have been living comfortably for a little while and think you can afford it consider getting a nice car again

by this point you should know what it is like to be responsible with your money and to live within your means. don't ever extend yourself to the point where you owe anywhere near what you make every month or roll any debt other than a house from month to month.

another eye opener to you might be checking out what your paying interest is actually costing you. your $20k car is likely going to cost you $30k by the time your financing is complete. your $50 xbox game or whatever it is that is on your credit card is going to cost you double or more than the original price of the item. is that worth it?

the only things worth paying interest on are student loans and house payments. the only reason interest is acceptable there is because both should make you more money in the long term than you pay in interest. every other interest payment is just throwing money away

 

[AWDthis]

Get a rich girlfriend.

Im trying lol but every girl i meet is in debt! (fuoops) whoops me too lol

Anyways I just had an idea, tell me if you agree. Call the bank see if they can refinance, pressure them that if they dont their just going to have to come tow the car and lose the money, if they insist they cannot then ill just pay half of the credit cards, at 50% credit usage my credit should go up to like 68X's right? Then wait 1 or 2 months and refinance the car? This way I have half of my reserves, my only fear is that if i pay down some of the debt the credit card company will keep lowering my credit limit.

 

[mountjonas]

i'm with them. sell your car. get everything else in check. 11% on a car is insane. hell, try to go for a lower interest rate, but I doubt you'll get one considering your rate in the first place. it'll be tough, but it's temporary.

 

[///M Compact]

i'm with them. sell your car. get everything else in check. 11% on a car is insane. hell, try to go for a lower interest rate, but I doubt you'll get one considering your rate in the first place. it'll be tough, but it's temporary.

Agreed.