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What creditor should I pay down if I have a partial lump sum of

Mark Cappel
UpdatedSep 18, 2023
What creditor should I pay if I have a lump sum?

Facing a judge's decision after a divorce, I was left with over $34K in marital debt. My ex-husband is ordered to pay me $11,500 lump sum. My debt includes a $10K Cap One credit card at 9.9%, a Chase credit card that I closed on a hardship and owe $13K at 6% and a vehicle with a balance of $11.5K at 6.2%. I am wondering which one to pay off, or should I throw some money at all of them. The vehicle pay off will eliminate the highest debt obligation, but the 9.9% will take me forever to get rid of. I am now staying with a friend but would love to be able to live alone again as soon as possible, as well as to get out from under this nightmare as quickly as possible. Thank you in advance for your advice!

Generally speaking, it makes the most financial sense to pay down high interest loans first. In this case it would be your 9.9% credit card. However, if you are in financial distress and are facing bankruptcy or are considering a debt resolution program, then it makes sense to pay off the car loan so that you continue to have a mode of transportation to get to work, and continue to earn an income.

Regardless of what you decide to do you may want to set aside some of the money into a rainy day fund for reserves.

To learn more about your debt options see Debt Consolidation and Bill Consolidation.

Because it is the case that I don't know the specifics about your overall financial situation I encourage you to consult with a certified financial planner, CPA, or other financial professional to review your debts and investments in detail. He or she should then be able to tell you how best use the funds to pay down your debts.

I hope this information helps you Find. Learn & Save.



Did you know?

Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q2 2023 was $17.06 trillion. Auto loan debt was $1.582 trillion and credit card was $1.031 trillion.

A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.

The amount of debt and debt in collections vary by state. For example, in Idaho, 20% have any kind of debt in collections and the median debt in collections is $1965. Medical debt is common and 11% have that in collections. The median medical debt in collections is $809.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.



BBill, Dec, 2009
Good to hear. One thought I should have mentioned before: travel nursing. This is especially attractive if you have wanderlust or no ties to your area.
ddottie, Dec, 2009
thank you for the advice, i have gotten a reprieve, have gotten the money to take a recerification, so will make me more marketable and will be able to work a nursing agency....also, was able to barrow money to get me a little time, until i can get some paychecks going, will be able to pay my 2 months behind on autos, house, and a finance company, now will have to work 5 days a week, until i can get ahead, but at least will be able to work....again thank you for your response...dottie
BBill, Dec, 2009
Repossession, wage garnishment, and/or levy do not happen automatically or according to a set schedule. See Collections Advice to learn more about the rights of creditors and debtors.
ddottie, Dec, 2009
am having problems meeting my financial obligations, am behind 2 months-including my autos and house, even tho i am an RN, and nurses are in demand, have not been able to land a job....i have 36 yrs expierence, and it seems as tho i have expierenced myself out of the market due to cost....i would have to be paid for my how long does it take before they will start repossesion, i am so afraid i will lose everything i have worked so hard to get...