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singofparadise

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Is there a difference in penalty if I let a 12k loan default vs a 6k loan?
My car was totaled and I'm horribly upside down on it. Default is really my best bad option. My question is - do I take the 6k my car was worth and put it towards the replacement car and allow the full 12k I owe on it go into default.... Or put the 6k into the car loan and only have 6k go into default? I know both options are terrible but I really don't have another choice.

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If you can't pay it all I wouldn't suggest paying any of it. Keep in mind that they can sue you for the amount you owe, so you may want to tuck that money away. A negative mark on your report does the same damage regardless of the amount. There is no extra penalty on larger amounts. I suggest that you read everything that you can about your situation and credit in general, the knowledge will help you.

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Your best bet is to look for a "beater" car for well under the 6K amount so you don't have an additional loan.  Then contact the original creditor and try to work out a payment plan to repay the debt.  That is the responsible thing to do and in the long run will look the best on your credit.

Yes, the beater may look like a piece of crap but at least you won't have a default on your credit.

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