Aoto loans with same creditors(Veridian/Cap1) as credit cards being settled??

Attempting to settle your credit card loans by falling behind on the minimum monthly payment shouldn't affect the status of your auto loans. Your creditors should be fine with the fact that you want to stay current on your auto loans. I don't think it will give you an edge in your CC debt settlement negotiations though.

Hi Sturtzy,

Credit products through credit unions are often cross collateralized. What this would mean to you given the information you provided is that falling behind on you Veridian card payment while making timely car payments - your car payment is applied to the card and you are now delinquent on the car and at risk of repossession. Also, small local banks do not often offer the same favorable concessions in settling a credit card debt that the larger national issuers do, and they can be more litigious in pursuit of collection.

In other words, the savings from settling may not happen, or may not happen to the degree you need it to in order to provide the relief you need.

Capital One cards can be settled, but the current target will be roughly 50%, sometimes more depending on how long you have had the account and other factors. Even the state and county you live in can effect settlement with Capital One. For example, CapOne sues more than any other creditor or debt purchaser in Hennepin County MN, Cook county IL etc.

You will definitely struggle to get settlement on any unsecured accounts that you are currently making payments on. Settlement dialogue generally does not begin in a meaningful way until you are at least 90 days late (there are some exceptions, but they are rare).

Given the details you provided and my reply, I have some questions:

What are the interest rates on the cards you listed currently?
What are the balances and interest rates on other cards you may have?
What are the interest rates on the auto loans?
What are your current credit scores?
What state do you live in?

If you can answer these questions, you will get additional feedback and perhaps some helpful tips to consider.

I don't have all the info. available at this time, but here is what I do have.

The Veridian card is at 11.15%
My car with Veridian is at 6.75%

The van with Cap1 is at 5.9%
The cards with Cap1 are both over 20%

I live in Iowa.

Some of the other creditors and approx. balances.

Summit Racing (GE Money) $2,000
HSBC $700
Union Plus (HSBC) $1,800
Orchard (HSBC) $500
Chase $4,400
Chase $800
Members 1st CU Visa $1,500
Amazon.com $500
Bill Me Later $1,300
Target Red Card (2 cards) $3,000

Not sure on the rates at this time, but they are all very high. Most over 20% and the Chase cards I believe are close to 30%.

On a side note, I just reached out to Veridian and this was the response. I was told the best they could do would be to freeze the credit card and drop my min. payment from $350 a month to $250. Same interest rate.

Also said they could use the car for collateral on the credit card. I owe more on the car than it is worth so that would do them no good. I doubt they want to repo a car that I am willing to keep current.

Thank you for the additional detail sturtzy.

If you were able to reduce your monthly payment outflow to all of these accounts by a couple hundred dollars, would that give you the breathing room you need?

What Veridian said about the car being collateral for the card is a real concern. While you and I can appreciate there doing that as irrational, it doesn't matter. Its a policy that governs their business practices.

With the credit scores it may be difficult to refinance the auto loans elsewhere for a better rate. If you could refinance the Veridian auto loan you would remove the collateral concern, but the concern that settling the credit card will not likely yield much in savings.

Assume your monthly payment on all the cards is around 650.00. How does that look for you?

I wish $650.00 a month would do it but at this point I need to clear up all the credit card debt and cut back on other expenses to be comfortable.

I did not mention it above but here are the reasons for the debt becoming such an issue.

First of all my oldest graduates HS in May and is off to college. I do not have money saved and am responsible for 1/3 of the tuition. I have zero issue with this and am glad to pay....just have to free up the money to do so.

Also my mom has been having heart trouble (irregular heartbeat). She has taken care of my youngest at nite while my wife and I work and can no longer do so. My wife has cut her hours in half to be home as we can not find overnite child care. We have looked and looked.

And lastly I suffer from chronic severe anxiety/insomnia which has got much worse due to the stress of the debt. and above mentioned issues. I have also had to miss work frequently due to lack of sleep lately.

I am definately not looking for sympathy and that is why I left the above out of my original post. This is just the my situation and I am looking for the best solution.

I have been considering chapter 7 as an alternitive and may just be the route I take to try and eliminate the stress of attempting to settle.

Anyhow.....that is my situation as of now.

Sturtzy,

Thanks for the additional details. It is actually good to post as much detail as possible. It allows those responding to get a clearer picture about your goals and concerns.

If 650.00 is a stretch based on monthly cash flow, speaking with a bankruptcy attorney should indeed be the next step in gathering information about your best option. If you meet the income means test for your household, discharging the credit card debts through chapter 7 would certainly provide the relief you need (money and stress).

You can reaffirm the car loans if you want to keep them. You may want to evaluate whether that is the right thing to do though. Freeing up additional cash flow by shedding one or both of the cars through the bankruptcy and not having to face any deficiency balance after voluntary surrender could free up additional monthly cash flow.

If you anticipate taking out plus loans, or other type of parental student loans, a bankruptcy may impede your ability to qualify for them.