You're still throwing out morality for a message board member's question on his unsecured loan. Lol, is this the business and investing forum or the religion and philosophy forum?

500,000. Do you own your own business? I do and I extend credit to customers. I do not have a plan in place for customers not paying me as a cost of doing business. It has happened though and it can be really disruptive to a business.

Banks have owners also. Sorry OP, but not paying that loan is theft in my eyes. I know that seems harsh but I have no sympathy for people who don't pay obligations they agree to. Especially since it doesn't seem like you are willing to alter your lifestyle to get it paid.

I do have a small business, and I understand your outlook. I would consider that sort of trade credit debt, to be with a member of an individual's community that should be repaid.

However, I also understand people have not paid debts in the past, are not now, and will not in the future. It's literally a part of business. I'm speaking to the fact that OP is getting morality lectures on the business and investing forum.

Do you think morals have no place in business?

Customer has a moral obligation to a corporation, as well as the inverse. Right...

cjsag94 said:

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You've got stars on Texags and talking about defaulting on a loan. Yes, start selling cars and whatever else you need to do to live within your means and meet your obligations. If you feel no moral obligation to pay your debts, and all you care about are your credit scores (which you don't seem to really care about today), then default.

But understands, this debt isn't what is causing the stress, it's the combined effect of all the financial decisions you have, and are, making today. Essentially, not living within your means.

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And a 12th Man tag. Giving to the sports part of A&M should be very low on your list in your situation.

Was this credit card debt run up during the marriage and then converted/consolidated into a loan? And what does "credit card debt managed decently" mean?

Sure they do. But I assure you the lender will have no moral hesitancy for lowering OPs credit and suing him. Why? Because it's their business.

The moral arguments are because OP mentioned items that people on this board consider unnecessary. That is moving away from answering, guiding, or helping, and toward passing judgement.

500,000ags said:

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items that people on this board consider unnecessary = answering, guiding, or helping

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Sorry, but this is more accurate.

I did not question that. By all means, opine on the bloated spending. I question the morality and thief elements of this thread.

I understand if there is a monthly cash flow concern, but 3 car payments because you "can afford the payments" leads down a bad path. Those are quotes from my household a few years ago. It seemed like every time we turned around there was a low or no interest deal out there waiting to take up another small chunk of our total income. Taken individually, they weren't a big deal at all. When we added them up, however, it became apparent that a small hiccup could devastate us. Divorce, ailing parents, college, a medical emergency - who knows?

When we started to total up everything that we owed on and figured out what it was in relation to our total income, that's when the real problems became apparent. We were making money today to pay for things we had purchased yesterday. In small doses and in the right circumstances, that's fine, but it became our way of life.

I'm not trying to lecture - just point out that you aren't alone - it's how we are taught to think about money. I'd really suggest trying to finding a way to solve the systemic issue - the comfort level with paying for things over time with money you haven't earned yet. Dave Ramsey has been mentioned a few times - he's great on this particular topic, and I'm not sure that's even debatable. Once you are out of debt there are plenty of arguments that his stuff isn't great, but for getting out of from under a pile of debt - his system works.

I'd look at his philosophy before I defaulted, refinanced debt into my loan, or any other drastic measure. Find a way to work your tail off, cut out all unnecessary spending, and sell some of the cars.

Good luck!

BO297 said:

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500,000. Do you own your own business? I do and I extend credit to customers. I do not have a plan in place for customers not paying me as a cost of doing business. It has happened though and it can be really disruptive to a business.

Banks have owners also. Sorry OP, but not paying that loan is theft in my eyes. I know that seems harsh but I have no sympathy for people who don't pay obligations they agree to. Especially since it doesn't seem like you are willing to alter your lifestyle to get it paid.

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This is the only post I take offense to on this entire thread. I realize that I may deserve some criticism based on decisions we've made to date, but you know NOTHING about my lifestyle, or my "willingness to alter it."

What if I told you I had to pay quite a bit for a child to spend five weeks in a residentlal treatment center after a suicide attempt? Or that we've loaned moeny to a father-in-law who lost his wife late last year and didn't even have enough money to bury her? Or that I drive a seven year old Toyota with 140k miles on it?

I'm not looking for ANY sympathy - the decisions I've made in my adult life have put me in my current situation, and I freely own those mistakes. I'm now trying to right the ship. Your comments just rubbed me the wrong way, insinuating that I am living some glamourous lifestlye that I'm not willing to alter.

OldAG. Really sorry to hear that stuff.

With that said, you came here with a story of a divorce, an Ag Tag, a 12th Man tag, and 3 car payments asking about defaulting on an unsecured loan. That is all we know about you, not that all was fine and then this string of high cost tragedies became too much to bear. So the comments are based on what we know.

With those ingredients, you are implying that those tragedies are why you have this particular loan... Although that is an assumption. If so, baseline question is what parts of your current lifestyle are you willing to change or sacrifice to meet your obligations. Should you wish to not make drastic changes, you certainly can default and simply deal with all possible ramifications, including a reduced credit score.

Fyi.. I Googled your question and found the following if you just wanted an answer to your question. Hope that helps, sure sounds like credit score hit could be the least of your problems.

https://www.loan.com/personal-loans/the-dangers-of-defaulting-on-an-unsecured-personal-loan.html

I sensed a bear-trap waiting to be sprung.

Regardless, back to my original advice, see if you can negotiate with the lender. And then hard choices need to be made. With all candor, you do seem like a prime candidate for the Dave Ramsey approaches suggested - seeing what you can do to get out of car payments, paying cash vs credit, and ESPECIALLY taking an extremely deep scrub of everything you spend money on. The 12th man tag and stars here while in this kind of situation absolutely do raise questions. One would be surprised how quickly you can actually scrape $1000-1500 together.

These smaller items add up a LOT faster than you think and you'd be surprised when you take a full inventory of your monthly spending, regardless of size of the individual item. You've already been dismissive of some pretty big ticket items with your references to the car payments. The biggest mistake I see you making is being dismissive of individual items that you've judged too seem small, but reality is when you string them together, it's actually a lot of money and could very well resolve your issue.

Some good points Danny - thanks. I listen to Dave Ramsey quite a bit and like his approach. Not 100% sure I'd be able to get everyone here on board but it is definitely a better approach than just "punting"

It's clear you are a generous person who has taken on a lot to help his family. But I sense there are some things where you really need to exercise putting your foot down. You are the one that seems to be carrying the load, and quite frankly, in your situation, I wouldnt give a damn as to whether or not they would want to get on board. They would be getting on board. Those tough choices can't and shouldnt just involve you. Everyone on the tit has to make them.

And by putting your foot down. I don't mean you neglect to help a desperate need. But everyone needs to feel the sacrifice and contribute.

OldAg92 said:

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BO297 said:

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500,000. Do you own your own business? I do and I extend credit to customers. I do not have a plan in place for customers not paying me as a cost of doing business. It has happened though and it can be really disruptive to a business.

Banks have owners also. Sorry OP, but not paying that loan is theft in my eyes. I know that seems harsh but I have no sympathy for people who don't pay obligations they agree to. Especially since it doesn't seem like you are willing to alter your lifestyle to get it paid.

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insinuating that I am living some glamourous lifestlye that I'm not willing to alter.

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But... that's exactly what you're doing.

3 car loans. Credit card debt. Personal loan. Student loan.

You're swimming in debt. Normal, like everyone else that's buying stuff yesterday and paying for it tomorrow. You're living a lifestyle that you can't sustain and to this point haven't made the choices necessary to live within your means.

As mentioned already, you should:
Cut up the credit cards.
Create a budget (I recommend using EveryDollar and following the wisdom of Dave Ramsey).
Call ALL your debtors and negotiate lower interest AND payments for all the debts you owe on, including the loan you're considering defaulting on.
Take on more jobs (and the wife too? any kids in the household that can work?). ANYTHING to bring in more income.
Part ways with all the auto loans and get beaters.
Sell anything you don't need / want just laying around.
Get rid of all subscription services -- Netflix, cable/satellite, Tivo, Spotify -- all of it.
Stop eating out and cut back on groceries.
Downsize to a smaller home.

Basically, if you're forking over money for stuff not immediately necessary to live, you need to cut it out or flip it.

Once you do all that, I PROMISE you will feel like you're living in a different world, one where YOU rule your money, not the other way around.

If you do all of that and you still feel like you're drowning, come talk to us.

Source: Clawed my way out of $75,000 in debt across multiple lenders in about 5 years by following the advice above. If I could do it, you can too.

Lots of outstanding advice here, especially from those with first hand experience. OldAg, I'm sorry you're in this situation. It has to be intensely stressful with the unpredictable needs of kids, and nobody plans on having to support themselves, their parents, and their kids, especially if they are adult kids.

Something that has not been raised is that a default, bankruptcy, or judgement could impact future employment opportunities for you, and it will certainly impair your ability to get cheap credit and get to a place where your money works for you instead of you working for it. You never know when you may have to take a loan while you have low cash reserves (medical debt, major home issue).

If the problem you are solving is a cash flow problem, what I would do, in order, is the following:

1) think of anything you can do to generate more money. New job for you or wife, side gig, etc. I think from other posts you are a lawyer, there could be some side gigs you could do
2) eliminate any unnecessary expenses or things you can do on your own. Mow your own grass, service your own pool, clean your own house. Cut off any family member that does not explicitly need your support. Stop all charitable giving
3) call the lender and negotiate interest rate, remaining balance, or loan term. Basically anything that can reduce your run rate obligation
4) refinance your house to capture equity to pay down the personal loan and/or lower your house payment
5) review all financial products / services you have and see if you can negotiate a better deal. Review insurance premiums, internet subscription, power utility, health insurance, etc
6) reconsider how you spend your money, particularly for convenience items. Fast food for 8 is f'in expensive, so plan in a way where you don't need it. Make everyone eat oat meal for breakfast, buy clothes second hand, eliminate waste, don't take vacations.
7) agree on your limits for the ailing relative
8) don't shortchange your own health, the safety of your home or vehicles to save a couple bucks

Where I probably differ from some others here is I wouldn't advise you or anyone to entirely sacrifice all joy or fun activities, just be smart about it.

One more thing - dude you're damn near 50 based on your class year. How are you going to retire? Time to make choices to get there

Get 100% on Dave Ramsey.... get 100% out of debt and worry free

there is a lot to be said about stress free financial living...

some other nuggets of wisdom...
Prov 22:7
I Tim 6:9
Luke 16:13

cjsag94 said:

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OldAg92 said:

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Car payments aren't bad. One under $200 and the other two under $300 so trading them in for other cars isn't gonna make or break the situation for me.

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So saving $800/month wouldn't help?

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This is not really a valid assumption given what is known.

A lot of it depends on trade in value and availability of vehicles for what is left after paying down the remainder of the loan. He may be able to get a beater, but he also may not. He may end up with only $500/mth in payments, but at the cost of a couple thousand in TTL. It's breakeven for older vehicles at that point.

Don't have any advice that hasn't ready been mentioned but this is probably the best and most helpful thread on this board in a long time. Boards like this one are so prone to self selection biases of only those having an easy time posting about what's going on in their financial lives. I suspect this thread could help someone else who isnt as brave as the OP.

hypeiv said:

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Not sure how accurate this, but one of my credit cards has a "credit simulator". I ran it with the scenario i stopped paying one account for 30 days and it dropped my score 90 points, when I set it to 365 days it only dropped the score by 20 more points (-110 total).

I still wouldn't recommend it, but it might not be as catastrophic as I would have thought.

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Not accurate at all. I'm sure some do and some don't know, but every group has a different credit model. CC's care way less than other things.

This would hurt way worse for future mortgages.

I wish the OP the best but it seems he doesn't even blink an eye when multiple posters bring up the fact that he is throwing money away donating to the university and texags. Give up the stars. One thing that always makes me scratch my head as of late are the older people who still cut a massive check to the university every month. My gosh...educate yourself on the current college economic bubble and why we are where we are.:/

DannyDuberstein said:

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It's clear you are a generous person who has taken on a lot to help his family. But I sense there are some things where you really need to exercise putting your foot down. You are the one that seems to be carrying the load, and quite frankly, in your situation, I wouldnt give a damn as to whether or not they would want to get on board. They would be getting on board. Those tough choices can't and shouldnt just involve you. Everyone on the tit has to make them.

And by putting your foot down. I don't mean you neglect to help a desperate need. But everyone needs to feel the sacrifice and contribute.

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I feel like OP is getting a little beat up. I have a sister who was a bit of a mess in her 20's and had kids. My parents not supporting her financially was easier said than done. Even though she wasn't pulling her weight, she was the mother to my nephew and his interests were more important than trying to force some kind of lesson she wasn't interested in learning at the time. Tough love is damn hard and there is a big grey area on these, you can be a pretty big mess and not be a HUGE mess (eg drug addict, criminal, etc).

I suggested trying to incorporate some Dave Ramsey principles by scrubbing everything thing they spend money on, however small, and using cash vs. credit. He expressed doubts that his family would get on board with that. I'm not talking about cutting people off. Like I said, a need is a need. But his having to consider a loan default while others in the family can't clean up with some basic financial discipline is BS. That's what I'm talking about getting firm about.

DannyDuberstein said:

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I suggested trying to incorporate some Dave Ramsey principles by scrubbing everything thing they spend money on, however small, and using cash vs. credit. He expressed doubts that his family would get on board with that. I'm not talking about cutting people off. Like I said, a need is a need. But his having to consider a loan default while others in the family can't clean up with some basic financial discipline is BS. That's what I'm talking about getting firm about.

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I'm not sure if OP is helping support grown children or not, but if he is, I would suggest he has a conversation with that child about taking on more of the responsibility. Say the kid's car he's paying for is $250/mo, he needs to tell that child that starting in October, he's only paying $100.

Quote:

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500,000. Do you own your own business? I do and I extend credit to customers. I do not have a plan in place for customers not paying me as a cost of doing business. It has happened though and it can be really disruptive to a business.

Banks have owners also. Sorry OP, but not paying that loan is theft in my eyes. I know that seems harsh but I have no sympathy for people who don't pay obligations they agree to. Especially since it doesn't seem like you are willing to alter your lifestyle to get it paid.

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I hope the morality discussions not totally dead. I agree with the idea of paying obligations. However, I can also see the side that says if you have different terms that increase financial pressure on those who will struggle to pay as it is, you can't use the morality card to get your way.

That's not morality. That's just plain risk-adjusted math.

Quote:

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That's not morality. That's just plain risk-adjusted math.

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Which I could see as a release of someone's moral obligation.

Everything has pretty much been stated and restated--change some things and stop any new debt from coming in, negotiate the debt you do have, work on some side income etc...

But I'll respond from a $1400 cash flow issue. Without knowing what you owe or the terms...you have a solid credit score, so why not use that to get another personal loan or refi?

Rates may be lower now than the original, and Marcus.com by Goldman Sachs has zero fee personal loans up to 40K for ~6% interest.

Open up some credit cards and use the balance transfer checks and play that game again after promotional periods. Home equity/HELOC options could be helpful. There are personal peer to peer lending sites out there as well--that you could tap into as well.

kids should be paying for their own cars, and their own kids, or be defaulting on their own loans


now a potentially useful rec, if you have good credit and several CC's with decent limits and age, look up selling tradelines, MMM forums has an extensive thread/guide, not as consistently lucrative as it used to be since so many got in on it but seems mostly dependent on what your card age/limits are

I've never heard of selling tradelines but I am intrigued after reading about it.

OldAg92 said:

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Car payments aren't bad. One under $200 and the other two under $300 so trading them in for other cars isn't gonna make or break the situation for me.

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Trading in cars is a terrible plan. Only way to NOT get hosed is to buy private and sell private from here on out. I realize it is potentially hard in your position, but if you have savings, you can make this happen.

Learning how to wrench is free. You can handle brakes and other maintenance easy with a little studying. Most new cars will go 200K or way more if you stay on top of oil changes. By new I mean made past 2005. Just do your homework on what models are easy to fix and have little issue.