With regard to selling trade lines, the CC companies are not a fan and will close your account if they find out you are doing it. Be prepared to lose any CC you are selling tradelines on.

Warning: long

To answer the OPs question, your score will take a HUGE hit. Miss one payment, and your score will go down to about 675 or so. Default and it goes into the low 500s. It doesn't matter where it starts; it doesn't matter that the other items are all on time. You will be in the 500s for a while and will get turned down for most CC apps and many other credit requests. Car loans and SOME mortgages may get through at higher rates, but in terms of mortgages, the underwriting will take a LONG time and you'll have to explain the circumstances, plus, you'll essentially have to be debt free other than the mortgage.

Just to fill others in on the lender, they are insured for a default. Not 100%, and it doesn't remove the morality issue, but you'd be surprised how fast and loose many of these businesses play on the other side of these contracts. Once represented a debtor against a finance company and when I sought to discover cases where they were the defendant in breach of contract actions, I got very nice settlement offers.

Don't default. I know you've been dealt a bad hand but realize there are many others that are in similar or even worse situations. I know a couple who's house all but broke in half and their lawyer didn't handle things right. Got foreclosed upon and lost their entire savings fighting it. One had serious health problems and the other got injured and couldn't work. They BOTH drive cars a hell of a lot older than 7 years. Heck, my wife and I both drive 6 year old vehicles.

I could go on and on. The fact is, you fall about in the 2nd fifth of people who've had personal and financial problems that I've encountered in the last 5 years. Meaning, they are certainly serious, more so than that of 20-40 percent of those with long term problems, but not as serious as 60-80 percent. That may sound like bunk to you because to you, this is a crisis; it is YOUR serious problem that is on YOUR mind right now. However, you still have your health; you still have a job; no one is coming to get your cars, turn off your lights, kick you out of your house, etc. I'm not accusing you of trying to make excuses, but you did volunteer the info about your divorce, your father-in-law, and your child's attempted suicide -- and I've very sorry to hear about all that. But at the end of the day, it doesn't really matter the reasons as the problem isn't made better or worse due to the causes. The problems exist, so let's solve them, and let's keep them from coming back again later.

My suggestion is that you have a family come-to-Jesus meeting and lay down the following plan for going forward:

1. We're selling our non-paid off, non-negative equity cars and buying cars with cash. Ordinarily, I wouldn't be in favor of all beaters but for a short term crisis situation, the psychology works: you want to get away from this situation as soon as possible, so it makes you work that much harder to do so. There are early 2000 Camrys all over the place. Saying getting out of your current car payments won't help is nonsense. Sounds to me like an excuse to keep your current lifestyle. Faded paint can be polished; interiors can be steam cleaned and extracted (youtube videos galore for both). Heck you might even turn a profit on the cars after a year if you keep the mileage down. If you don't want to sell your cars, then downsize your house*. Something has to give. It is a simple arithmetic problem.

2. Everyone in the house 18 or older that can work outside the home must do so, even if it is only 15-20 hours a week and even if it is only to pay for a car, gas, insurance, and cell phone. Kids are welcome to live at home and eat there, but can't totally free load. They must also pitch in -- yard work, house cleaning, etc. to take the load off the bread winners to bring in the serious monthly income. They can also cover any sitting needs.

3. Cable, netflix, etc. as stated, gets cut. I'd check into upping the phone data plan and cutting the internet and using the library, even if temporarily, for heavy net needs (if they exist). For entertainment, OTA antenna TV and DVDs. Cards, board games, and books. There are tons of free and low cost entertainment options.

4. Sell, sell, sell. I can almost guarantee you have a minimum of $500 in garage sale merchandise, including things you don't necessarily want to part with but don't really need anymore. If you don't want to have an actual garage sale, Facebook has a marketplace app and there are other phone apps that do the same thing. Go through your garage, get rid of bikes you don't ride, and other things -- kitchen items, clothes, furniture, etc.

*Edited to add: Think seriously about renting your house and moving into a smaller rental unit yourself. This may not work depending on your location but if your house is big enough and can command the rental income, a year away may be OK.

This meeting I speak of, you will come up with many other things you can do. I'm not discouraging doing other things mentioned on here, but you need to get organized and have a plan.

Once again, do NOT default. You will regret it. You will never regret working hard to get out of this mess. I've done it and helped many others do it as well.

I don't think there is a morality issue at all. Our own president has boasted how he has gamed the system through bankruptcies. This is the American system of capitalism and more power to you if you can bend it in your favor.

Like that old saying goes, don't hate the player, hate the game!

hypeiv said:

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91AggieLawyer said:

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on the lender, they are insured for a default. Not 100%, and it doesn't remove the morality issue

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In my mind there is no morality issue with defaulting a loan. The banks see an investment opportunity to make a profit when they partner with someone by giving them the loan, they charge a rate based on their perceived level of risk this investment involves. The risk should be shared between both parties in this venture. Unless the person borrowing money never intended to pay it back in the first place, its just an investment gone bad, which happens all the time.

If a bank gives a guy a loan to fulfill his dream of opening a coffee shop and the sales don't work out as expected and the place goes under, would anyone say that guy is immoral?

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I think the issue most are taking is that the OP has the means to service the loan.