Regarding a loan almost paid off...

[RictusGrin]

So I am probably going to file BK7 at some point in the near future (no assets, 25k in debt, unemployed). It's been a rough year.

Here's the question:
I have a loan from Cap One nearly paid off that is autodrawn out of my account.
Two more months and it's done.
However, I also have two CCs with Cap One that are in collections.

Should I bother with paying the loan off? Or should I not? Would I get a credit boost if I paid it off? Unsure how it works.

Thanks.

[ForumReader]

So I am probably going to file BK7 at some point in the near future (no assets, 25k in debt, unemployed). It's been a rough year.

Here's the question:
I have a loan from Cap One nearly paid off that is autodrawn out of my account.
Two more months and it's done.
However, I also have two CCs with Cap One that are in collections.

Should I bother with paying the loan off? Or should I not? Would I get a credit boost if I paid it off? Unsure how it works.

Thanks.

If you do not plan on filing for BK at this time and you pay off the loan, your credit might take a little boost, but then your credit is probably being tanked because of your other accounts that are already in collections. Is your loan related to an auto loan? If so, please be sure to check your state exemptions for your vehicle and seek several free BK consults if you want to go with an attorney route (or file pro se) when you are ready to file. On the other hand you might want to check with several BK attorneys due to your credit debt being relatively low before deciding to file for BK. Good luck!

[RictusGrin]

Thanks for your response.

No the loan is not for an auto loan. I am paying the auto loan I have in full every month, would like to keep my car.

If so, please be sure to check your state exemptions for your vehicle and seek several free BK consults if you want to go with an attorney route (or file pro se) when you are ready to file. On the other hand you might want to check with several BK attorneys due to your credit debt being relatively low before deciding to file for BK.

Could you elaborate on that a bit more? Are you suggesting I negotiate all the debts down for 10-30 cents on the dollar and pay it off without filing BK?
Considering I now owe 7k to the IRS (thanks insane ex-wife) it's going to be a while to pay all this off.

[ForumReader]

Thanks for your response.

No the loan is not for an auto loan. I am paying the auto loan I have in full every month, would like to keep my car.



Could you elaborate on that a bit more? Are you suggesting I negotiate all the debts down for 10-30 cents on the dollar and pay it off without filing BK?
Considering I now owe 7k to the IRS (thanks insane ex-wife) it's going to be a while to pay all this off.

You are welcome. As mentioned by several posters from this site, a BK is a serious and business decision and can only be done every 8 years (for CH7) so you might want to talk to several BK attorneys to see if this is the best route given your debt amount. If you are able to settle for a certain set of cents on the dollar for each debt with the money to work with, then you might be comfortable with this route. Please keep in mind most creditors want settlement paid up lump sum or in a few months' installment plan. Since you owe 7K to the IRS, it sounds to me the IRS has set up payment plans with you regarding the IRS debt? How long ago have you stopped paying your cc's before they went to collections?

[RictusGrin]

If you are able to settle for a certain set of cents on the dollar for each debt with the money to work with, then you might be comfortable with this route.

Is there any benefit to doing this (going Chp 13 vs 7, I am assuming that's what you're suggesting)? Isn't my FICO going to take approximately the same hit?

Ive stopped paying for 3/4 months.

[ForumReader]

Is there any benefit to doing this (going Chp 13 vs 7, I am assuming that's what you're suggesting)? Isn't my FICO going to take approximately the same hit?

Ive stopped paying for 3/4 months.

Sorry, I just realized from your first post that you are unemployed. It would probably be best to get free consults to see what is the best route for you with settling your debt. Are you able to settle your cc debt while being unemployed? Also, keep in mind when filing for BK (--with CH 13, one definitely should have income to fund a CH13), listing income and debt is part of the process. Either way with CH13 or CH7, your FICO will take about the same hit.