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Question By
sheadelese

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Should I put my car up for collateral to bring my credit cards back to current?
I have 3 past due payments on my credit cards. I hit a hardship and just couldn't afford to pay them. Capital One isn't trying to work with me and I'm afraid to go into 3rd party collections. I've tried the unsecured personal loan route but no company (not even a peer to peer) will lend to me since my credit score took a massive hit from the late payments and increase of debt to income. There's not much equity in the car so the loan won't pay off my credit cards in full, just bring them back to current status. I understand this wouldn't solve my debt problem but I don't know what else to do to get back on track... Any suggestions will help. Thanks in advance.

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You will not get much for the car, you will have to pay back quickly, and you will have to pay a lot on fees and interest.  My best guess is that you will incure nearly double the money you borrow on a title loan.

Capitol one is playing hard ball and scaring you, or you are many months (close to a year in arrears) behind. Otherwise if you start paying over the monthly minimum (perhaps double) then they will continue to service the line, but most likely close the line of credit.  They LOSE money when they give to collections, and if you show some form of communication and payment they will keep it out of collection, but it sounds like you are sure this not an option, either due to being so far behind and little communication.  

Then in which case you have some touch choices.

Can you really make the types of payments assocciated with a titlte loan AND keep up on everything else, because if not it still might be better to just deal with the collection company.  Typically these types of loans are a spiral down with little hope of getting back up once a person starts on the title loans as then something else gets neglected etc.  But if you KNOW you can keep all payments up with the ADDED payment of the title loan, then it might keep the collection agencies out and avoid one more negative in your credit file.

Reply by
sheadelese

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Thank you so much. I have 3 late payments (3 months) so think you're right about CapOne playing hard ball. The collareral loan is a last resort thing. As of now I'm going to continue to try to work it something out with them. I appreciate your response!

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Nomadre

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If you are only that far behind, I personally would let the person you are speaking with that you know the score.  They stand to not make as much money (lose revenue) if they have to incur costs to sell to a collection agency. Make a double payment, then call back and ask to speak to a manager, again let them know that you understand the business and that you are trying to make it a win win for everyone, that your plans are for at minimum doubling the minimum due each month until caught up or even paid in full the amount oweing.  

Another avenue to try is to let them know your next step will be to contact a debt manager who will not only be discussing getting caught up, but also reducing the late fees and interest.  So it would be in everyones best interest to continue to work together.  

I am not sure that will work, but often debt managers/consultants will do just that. It is not something I would suggest really doing as these would be major hits to your credits as they become writeoffs and reported as such.

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I advise taking tthe time to read the articles here so you can learn how credit works.  The late payments are a matter of record that will remain on yoiur credit report for 7 years and will not be erased.  You can continue paying mointhly EVERY amonth without fail now and the late payments will have little impact as time passes.  Please read and learn, and you will benefit from this knowledge. 

Reply by
sheadelese

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I have read and I know that. I was asking specifically about bringing my cards back to current. I said Capital one won't work with me. It's either I pay a large amount to bring to current or I go to collections. No middle ground. No payment arrangements. So it's collateral loan or nothing.

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