CAN YOU JUST WALK AWAY FROM THAT BAD CAR LOAN?

Bankruptcy may be something that you believe you can avoid.  After all, you don’t owe too much money or you believe you can manage your debts – except for your car.  So what to do? Well, perhaps your plan is simply to voluntarily surrender the car to the finance company. No need to file bankruptcy, right? Wrong!

A car lender which believes that it is not going to get paid wants to get its collateral back as quickly as possible - with as little fuss as possible. Sometimes this leads to the finance company telling the borrower - “don’t worry, the car will be sold and you’ll get a credit for the sale price.” To be sure, the finance company does not want to pay the “repo man” to chase around the borrower, so the lender will often make it sound as though it is sympathetic with your situation or even trying to help you.  What is left out of the message is that the vehicle will be sold at an auction, yielding a very low sale price. 

Voluntary surrender is a repossession and is a default of your credit agreement. Repossession is repossession, whether done in the middle of the night by a tow truck, or voluntary turnover by the borrower.  It will not only harm your credit rating, but it will result in a repossession sale of your car no matter how the lender gets it, and usually for much less than you could have sold it for yourself …and you will owe the lender the deficiency balance, which is the difference between the price it sold for and the balance on the loan.

If you believe that you can no longer afford your car payments, if you feel your car is worth less than you owe, or you simply need time to get caught up on a few missed payments, bankruptcy may be the right answer.  Depending upon what YOU want, you may be able to surrender the vehicle without any risk of a deficiency.  You may be able to lower your payments or the balance you.  You may be able to “re-purchase” the car for its current market value, no matter how much you owe.  Or, you may be given time to get caught up.  Bankruptcy is a power tool and it is designed to help good people stabilize their financial situation – including car loans.

Do yourself a favor. 

Call Speckman Law Firm before you loose your car to the Repo-Man.  If your car is taken, you may wind up having to file bankruptcy to get rid of the deficiency balance; you might as well explore how bankruptcy may be able to allow you to keep the car.

619-696-5151