Does it ever make sense to purposefully default on consumer debt obligations?

Question

Specifically, say one has had his car repossessed. Would it make sense to then default on other consumer debts with the hope of paying them off later at a discount after write-off? The idea being: one's credit has sustained major damage because of the repo so future defaults (even when one has the ability to pay) would not make the situation any worse. Think of it as the situation getting worse in order to make it better, quicker. Why pay something off at 100% (plus interest) when it can be paid off in, say, a year at a fraction?

Answer 1

That is similar to telling a lie to cover a lie. At some point you have to accept the reponsibility of the actions or be still for 7 years until it blows over. You are talking about planning to default and that will not result in better scores.

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Answer 2

No, it doesn't make sense unless you want your credit to really suck. You've already got a repo which is bad enough. If you let the others get written off your credit score will drop and you won't be able to get a credit card, house, car, loan or anything.It won't get better faster. If you at least continue to pay the rest of your bills, on time, it will show creditors that you are not totally irresponsible. If you didn't want to pay at 100% plus interest then you shouldn't have opened all the accounts. Go ahead and stop paying everything and you won't have to worry about paying interest again for a long, long time.

Answer 3

If you and the creditor decide to settle, you better make sure you get it in writing that they will report the item as paid, not as settled. When a comment says settled, you are still penalized slightly. You will want to weigh your options depending on the number of other creditors, remember that if you default on many just to pay the repo, the many collection items will stay on your report for 7 years and lending agencies would rather see that you defaulted on one item instead of say five (which makes it appear to them that you default on a regular basis).