Payment shock

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    I made a bigger payment in my car note to try and reduce my debt amount in efforts to pay it off sooner. The payment I made did not pay the car off. Can that payment still be counted towards payment shock exception since it’s not a credit card? I also had an emergency expense within the same statement.

    Damien Smith

    Greetings @Miahow1,

    I hope this message finds you doing well! I hope that I can clarify your understanding. Payment shock is a savings difference. For instance, if you pay $600 a month in rent however you would like a $1000 monthly mortgage then you would save the difference of $400 every month according to your mortgage counselors instructions whether that be 3, 6 or 9 months in your savings account and do not touch it as it is verified by your bank statements. When you pay off debt that does just what it does this eliminates debt but it does not give you a savings. Lastly, please confer with you MC about specifics to your financials. I hope this helps!

    Damien Smith
    Online Communications, NACA


    Hello miahow1,

    You will need to discuss this with our counselor to determine for sure if it can be counted toward Payment Shock. While funds used to pay down debt can normally be counted toward Payment Shock, your situation seems a little different than usual, especially with the emergency expense around the same time. Your counselor will have to take a detailed look and let you know for sure.

    Tim Trumble
    Online Operations, NACA

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