Should I take out a loan vs pay off with mother's help?
Is it a gift or a loan? Either way, ask the same lawyer who will do the closing to record a mortgage on the property, your mother holds it.  You are required to pay her market interest, 4% or so should pass IRS scrutiny.  If it's truly a loan, decide on the payoff time and calculate the payments, she'll have a bit of interest income which will be taxable to her, and you might have a write-off if you itemize, which is unlikely.  If it's a gift, since you mentioned gift concerns, she can forgive the interest, and principal each year to total $13K, or file the popular Form 709 to declare the whole gift against her $1M unified lifetime gift exclusion (which negates the whole mortgage/lien thing)
"Seems to me you don't have a ton of great choices, but of them: Keep going as you are.  If/when the car becomes unusable without significant expenses, stop using it.  Buy another junker and use that to get by until your loan is paid off.  From now until then, put aside a few hundred (or whatever you can, if more) each month towards the anticipated purchase.  When you do buy this junker, pay in cash - no loan.  Just get something that will take you to work, and that includes ""bike"" if that's a possibility.  When you can, sell the no longer usable car to finish paying off the loan. Start aggressively paying off the current loan, with the eye of getting it down to where you're not underwater anymore.  Then sell the car and dispose of the loan, and buy a better replacement.  Scrimp and save and cut everything - eat cheaply (and never out), cut your personal expenses everywhere you can.  If you get another $250 a month towards principal, you can probably be no-longer-underwater in about a year. Get a personal loan today for the amount that you're underwater, and immediately sell the car.  This gets you out of the loan and car the quickest, and if you think the car will devalue significantly between now and when you might be not underwater anymore, this might be the best option.  But it's the most expensive, likely - you'll pay 12% to 20% on the difference.  Now, 12% of $5000 is less than 5% of 15000, so it might actually be a good financial deal - but you'll probably have to shop around to get 12-15% with a 660 (though it's probably possible).  You'll still be without a car at this point, though, so you'd have to buy another one (or live without for a while), and you'd still have a payment of some sort, but perhaps a more manageable one ($5000 @ 12% @ 5 years means something a bit over $100 a month, for example.) I recommend that if you can get by without a car for a while, option 2 is your best bet.  All of these will require some financial care for a while, and probably cutting back on expenses for a year or two; but realistically, you shouldn't expect anything else.  Get a budgeting app if it will help see how to do this. As far as getting out of the loan without paying it, I don't recommend that at all.  Your credit will be ruined for at least seven years, and 660 is not bad at all really, and then would take  yet more years to recover.  You will likely be sued for the balance plus collection costs, beyond repossession.  The consequences would be far, far worse than just paying it off, and I mean that financially as well as ethically." In a nutshell, not really.  That's the risk you take when you co-sign for someone.  The lender only made the loan because of the strength of your brother's credit, not your mother's, so his reputation (in the form of his credit rating) is going to take the hit because of his mother's behaviors. The one thing he can do is this:  The credit bureaus allow you to add a comment or explanation to your credit file which may be helpful, provided potential creditors read it, which is never a guarantee.  It's worth trying though, so suggest to him to look into it. Here's a link for him/you/anyone to look at that can help explain how this works and what effects it can have: Adding a comment to your credit file for negative items I hope this helps. Good luck! I have a car loan paid in full and even paid off early, and 2 personal loans paid in full from my credit union that don't seem to reflect in a positive way and all 3 were in good standing. But you also  My credit card utilization is 95%. I have a total of 4 store credit cards, a car loan, 2 personal loans. So assuming no overlap, you've paid off three of your ten loans (30%).  And you still have 95% utilization.   What would you do if you were laid off for six months?  Regardless of payment history, you would most likely stop making payments on your loans.  This is why your credit score is bad.  You are in fact a credit risk.  Not due to payment history.  If your payment history was bad, you'd likely rank worse.  But simple fiscal reality is that you are an adverse event away from serious fiscal problems.   For that matter, the very point that you are considering bankruptcy says that they are right to give you a poor score.  Bankruptcy has adverse effects on you, but for your creditors it means that many of them will never get paid or get paid less than what they loaned.   The hard advice that we can give is to reduce your expenses.  Stop going to restaurants.  Prepare breakfast and supper from scratch and bag your lunch.  Don't put new expenses on your credit cards unless you can pay them this month.  Cut up your store cards and don't shop for anything but necessities.  Whatever durables (furniture, appliances, clothes, shoes, etc.) you have now should be enough for the next year or so.   Cut your expenses.  Have premium channels on your cable or the extra fast internet?  Drop back to the minimum instead.  Turn the heat down and the A/C temperature up (so it cools less).  Turn off the lights if you aren't using them.  If you move, move to a cheaper apartment.  Nothing to do?  Get a second job.  That will not only keep you from being bored, it will help with your financial issues.   Bankruptcy will not itself fix the problems you describe.  You are living beyond your means.  Bankruptcy might make you stop living beyond your means.  But it won't fix the problem that you make less money than you want to spend.  Only you can do that.  Better to stop the spending now rather than waiting until bankruptcy makes your credit even worse and forces you to cut spending.   If you have extra money at the end of the month, pick the worst loan and pay as much of it as you can.  By worst, I mean the one with the worst terms going forward.  Highest interest rate, etc.  If two loans have the same rate, pay the smaller one first.  Once you pay off that loan, it will increase the amount of money you have left to pay off your other loans.  This is called the debt snowball (snowball effect).   After you finish paying off your debt, save up six months worth of expenses or income.  These will be your emergency savings.   Once you have your emergency fund, write out a budget and stick to it.  You can buy anything you want, so long as it fits in your budget.  Avoid borrowing unless absolutely necessary.  Instead, save your money for bigger purchases.  With savings, you not only avoid paying interest, you may actually get paid interest.  Even if it's a low rate, paid to you is better than paying someone else.   One of the largest effects of bankruptcy is that it forces you to act like this.  They offer you even less credit at worse terms.  You won't be able to shop on credit anymore.  No new car loan.  No mortgage.  No nice clothes on credit.  So why declare bankruptcy?  Take charge of your spending now rather than waiting until you can't do anything else. "But in the debt-payoff-first scenario, I'd be wiping out my debt in   two years. It would take several more years if I were to just pay the   minimums and put the extra money toward investing instead. Right. The idea is that in 2 years, you are likely to have more in the savings/stock account than you owe on the loan. But. The range of returns for X years has a smaller standard deviation the greater X is. e.g. any year has about a 1 in 3 chance of being negative. A 10 year period had a negative return (-1% CAGR) in the '00s recently, but the 15 year return even around that decade would have been successful. Jan 1 '96 - Dec 31 2010 returned 6.76% CAGR, Jan 1 2001 - Dec 31 2015 returned 4.96% CAGR.  This tells you that the time frame is as important as your sleep factor. Your 2 years? I'd just kill the loans. A 10-15 year horizon? I'd ask how you ""feel"" about that debt. The cost of going after a potential higher return may not be worth the risk to many. For some, it's fine. I retired, with a mortgage still in place, but the money in my 401(k) that could have paid off the mortgage is now about twice the remaining balance. So I sleep like a baby.  In the end, I'm a fan of investing for the long term vs paying off low rate debt, but it's a choice based on the individual." "Never forget that student lenders and their collection agencies are dangerous and clever predators, and you, the student borrower, are their legal prey. They look at you and think, ""food."" My friend said she never pays her student loans and nothing has happened.  She's wrong. Something has happened. She just doesn't know about it yet. Each unpaid bill, with penalties, has been added to the balance of her loan.  Now she owes that money also. And she owes interest on it. That balance is probably building up very fast indeed. She's playing right into the hands of her student lender. They are smiling about this. When the balance gets large enough to make it worthwhile, her student lender will retain an aggressive collection agency to recover the entire balance. The agency will come after her in court, and they are likely to win.  If your friend lives in the US, she'll discover that she can't declare bankruptcy to escape this. She has the bankruptcy ""reform"" act of 2006, passed during the Bush 43 regime, to thank for this. A court judgement against her will make it harder for her to find a job and even a spouse. I'm not saying this is right or just. I believe it is wrong and unjust to make university graduates into debt slaves. But it is true. As for being paid under the table, I hope your friend intends on dying rather than retiring when she no longer can work due to age. If she's paid under the table she will not be eligible for social security payments.  You need sixteen calendar quarters of social security credit to be eligible for payments.  I know somebody like this. It's a hell of a way to live, especially on weekends when the local church feeding programs don't operate.  Paying people under the table ought to be a felony for the business owner." The interest that you are proposing to pay your MIL is actually quite low compared to even extremely conservative investing which easily earns 7% or more with quantifiable low risk. You claim that it would be no risk, but what would happen if you lost your job? The risk she faces is more or less exactly what a bank would experience while giving the loan, or in other words it is pretty much whatever your credit score says. Even worse, she does not have a large pool of investments to distribute this risk like a bank would. Making loans this large in a family situation is a recipe for disaster. Taking a huge risk with the relationship your wife has with her mother over three points of interest is exceptionally unwise. Are these private or federal student loans? Federal student loan debt is some of the safest to carry due to its income based repayment plans and eventual loan forgiveness after 25 years. Have you investigated income based repayment options? "The bottom line is you broke the law.  While this is pretty much victimless, it is none the less a violation of the law and should be avoided in the future.  I would have not agreed to this as a parent and it sets a bad precedent.  As such I would avoid trading and move the money into cash until you turn 18.   Once you turn 18 you should transfer the money into an account of your own.  From there you may proceed as you wish. As far as paying taxes, of course you need to pay them.  Your mother did this as a favor to you and by doing such you caused her tax bill to rise.  As a gesture of goodwill you should at least provide her with half of the profits, not the 15% you propose.  Fifteen percent would be the ""I am an ungrateful son"" minimum, and I would seriously consider giving all of the profits to her." "I'd change my attitude a bit. ""I'm not very good with saving money, unless I know I need to.""  If you could act as if you absolutely needed to save, but took the subsidized loan and set it aside, you'd have a good start.  As a student, it would be difficult to raise money the way an established working person might. A low interest credit card, a 401(k) loan, Home Equity Loan, etc.  If you feel it would be too tempting to set it aside, don't take it. Your question is fine, but the answer isn't financial, it's behavioral."