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I’m going over my credit report, and feel pretty overwhelmed. I lost my car (rather it was repossessed) after losing my job and getting on unemployment, which is so much less that I can barely afford food every month, so forget about a car payment. And, quite frankly, I just want to know what happens if I don’t pay off these debts? I don’t have a lot of debts, but for a 21 year old college student, I’m pretty much in front of the financial firing squad as we speak. 5K on the car, 2K student loans (which don’t need to be paid back until I graduate), 1.5K on a Capital One card. Those are my concerns.
So question: what if I just never pay? Is it possible to rebuild my credit without paying them back? Doesn’t it reset every 7 years or something?
Thank you.

7 Comments »

1. 

   You are correct. If all you care about is credit score, these items will come off of your credit report in seven years provided that there is no additional activity on the account. However, that is not what is important here. What is important is that you owe people money and they are going to come to get it. That is completely separate from credit rating.

   Here is what is likely to happen if you ignore them. Your creditors are going to attempt to collect their overdue money and then send it to into collections after a period. The collection agencies will pile on lots of fees and interest so you wind up owing more. If they still do not get payment, they are likely to file a lawsuit against you which they will win. A judgment will be filed against you and the creditors will be able to seize property and garnish your wages to recovery their funds. This applies to all except the student loan. If this is a federally subsidized student loan, they go directly to garnishment.

   Get in front of these now. This really is not a ton of money. If you need to deliver pizza for three months at night to get out of debt…DO IT!!

   Comment by Jay P — January 23, 2010 @ 4:14 pm

2. 

   if u don’t pay your debt collectors will call and your credit score will go down so badly that nobody will give u a loan for anything. its not good to have a bad credit report. also if u don’t pay your credit debt or car for too long u will incurred monthly interest rate charges on credit cards and car payments which will lead to more debt and eventually u will be so high in debt that it will cause u to file bankruptcy. try and work with them to see if u can have a lower payment. it will in the end make u pay more with the interest. even after u graduate if u defer a loan it could accumulate interest. so try not to leave it alone because it could just make things worse and u have to file bankruptcy.

   Comment by carol — January 23, 2010 @ 4:14 pm

3. 

   Concentrate on paying off your credit card or give yourself leeway by taking out a new card with 1 0% period for a few months on balance transfers. Do all you can to reduce the car debt. If it is a bank loan write and ask if you can reduce payments for a time. This will not save in the long term but may help short-term.

   You are not heavily enough in debt to look at bankruptcy or similar.

   Try and find a part-time job eg bar work, shelf-stacking or similar. Not well paid but would cover your car repayments.

   Comment by Johnka — January 23, 2010 @ 4:14 pm

4. 

   You can contact you creditors and negotiate settlement on your accounts,if not they will put a mark on your credit that will take years to remove,or you can bankrupt,All are a tough pill to swallow, All will work out in time,But learn the lesson on credit,if you borrow ,paid off balances in full.

   Comment by 6062glc — January 23, 2010 @ 4:14 pm

5. 

   im in the same boat you are in bankruptcy is the answer loans are the work of the devil

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6. 

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   Comment by Shantel kerry — January 23, 2010 @ 4:14 pm

7. 

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   Comment by Jennifer — January 23, 2010 @ 4:14 pm

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