If you are behind on car payments or decide you will not be able to make the payments in the future, you can decide to voluntarily turn in your vehicle. We encourage our clients not to voluntary turn in their vehicle prior to filing bankruptcy, but we will discuss that in more detail below.
What if you do choose to voluntarily surrender your vehicle? How should you go about doing that? If you are going to voluntarily turn in your car you will need to call the finance company and set up a time where you can bring the vehicle to them. It is critical you get a business card or use some kind of identifying method to show who you left the vehicle with. You do not want to just drop it off and walk away without knowing exactly whom you turned the vehicle in to. In the past we have heard of dealerships not reporting the vehicle as turned in to the finance company. This means you would still owe on the car. Sometimes people will choose to voluntarily turn in the vehicle instead of having the finance company come to their home or place of work and repossess it. By doing so they can avoid the feeling of not knowing when their car will be picked up. It is on their terms instead of the lenders.
Once you turn the vehicle in to them, the creditor will then sell the vehicle. You will receive a statement from the finance company after the vehicle is sold. You will still be responsible for the difference between the amount you still owe for the vehicle and what the sales price is. That debt does not automatically go away just because you do not have the vehicle anymore. The amount you owe is called the deficiency balance and this is a debt that can be included in a bankruptcy filing. This occurs whether the vehicle is voluntarily surrendered or repossessed.
However, it is important to know voluntarily turning in a vehicle prior to bankruptcy filing will still go on your credit report as a repossession. This means you will still have a negative mark on your credit report and do not forget you will still owe the deficiency balance even if you voluntarily surrender the vehicle and do not file bankruptcy. We typically encourage our clients to surrender their vehicle within the bankruptcy instead of the voluntary surrender prior to bankruptcy. If you surrender the vehicle within your bankruptcy a repossession does not appear on your credit, and you can still eliminate the remaining debt within your bankruptcy. If you are planning to file bankruptcy and have already voluntarily surrendered your vehicle, be sure you discuss the voluntary surrender with your attorney so the deficiency balance can be properly taken care of.
My ex boyfriend and I got a car together last year. I no longer can pay for the car and he doesn’t want to sign a POA for me to sell it and pay the debt. He is the primary buyer, I am the cosigner. I am contemplating on turning in my car to the dealership and have him pay the debt. How can I repair my credit after this?
Isabel,
Thank you for your question. I’m sorry to hear about your situation. The best plan would be to sell the vehicle before it is repossessed so you do not have a repossession on your credit. I understand that doesn’t appear to be an option in your situation. I would have a long talk with your ex-boyfriend and let him know it will negatively impact his credit as well and if he is the primary debtor on the car then they may go after him first.
If you do have to either voluntarily turn it in or if they involuntarily take the vehicle then the steps you can take to try an help rebuild your credit are the same as the ones to rebuild your credit after bankruptcy. Here is a link to an article we wrote on the very topic.
How to Rebuild Your Credit After Bankruptcy: https://www.duncanlawonline.com/rebuild-credit-bankruptcy-6-steps-step-1/
If you have other significant debts you may want to consider speaking with a bankruptcy attorney as well to at least explore that as an option too. Best of luck!
Damon Duncan and The Duncan Law Team
I will be voluntarily turning in a vehicle in a few days due to not being able to fix the issues at hand our warranty has expired and we only owe 12,000 on it so whatever it sells for I know we have to pay the difference but how does that impact your credit if it shows you’re paying on it willingly to get it off and how does it work to have it taken off your credit?
Denise,
It will show as a repossession on your credit report. Paying the deficiency balance will help you rebuild your credit but the repossession will still have a significant impact on your credit. Check out this blog posts series we put together on how to rebuild your credit after bankruptcy.
I want to turn in my car, not because of making payments. I got my car at a dealership, the tags was expired. They said they will call me when tags comes in, got the vehicle in May of this year. I call every day, they tell me to call this day I call same thing just different day. I got pulled over, the good thing was I didn’t get a ticket. But the officer come back and tell me, that the car is not registered under my namejust my insurance. Now they are saying, they are waiting for the other finance company to release the vehicle on send them papers. If I was to turn it in because of that reason, would it still be a repo. How should I go about handling it. I paid my full down payment, I have been on time with 3 of my car payment, going on the 4th month and I still can’t get my tags. What should I do
Valu,
It’s tough to give you a great answer just because you can’t, obviously, force people to do the right thing. I would try to talk to a manager at the dealership. If that doesn’t work I would tell them that if it is not completed by a certain date that you are going to contact the Better Business Bureau and attorney general’s office in your state. You could turn the vehicle in but they may still be able to come after your for the deficiency. You could always fight it in court and dispute anything on your credit report but that may become a pretty big headache.
if i surrender my vehicle under the ”half rule” does that going beneficial my escape from me having to pay off entire loan? or do i still need to file bankruptcy chapter 7 or 11? please help.
My husband purchase a vehicle , nor knowing the car was going to be in my name, wasn’t there for the agreement ,paper work was already approved , when I got there , thinking I was just a Co signer, sign everything no one told me it would be in my name , when he left with vehicle I started looking over the contract , and found a lot of discrepancy with the contract, took vehicle back , and left k yes with manager , in threw days they bought vehicle back and parked it in my drive way didn’t find the keys until two days , it’s a brand new car tags not even registered , sign a surrender vehicle, back to the loan company , it’s been almost two weeks , had to go to a notary make a complaint and send back haven’t heard anything what else should I do
Debra,
You’ll just want to be very careful. The car company could take the vehicle back and auction it off and go after you guys for the deficiency balance.
I am from British Columbia. I bought a car Sept. 2012 from a repo depot. The finance manager told me since I had a bad credit rating he fudged the numbers so I could get the loan and vehicle. I thought it would help with my credit rating so I kept it not seeing I was in way over my head, the payments are too high. I went to my bank after a year to see if they would buy the loan but because of my rating they wouldn’t help me.
I have an opportunity to get a good car for free. I want to get out of this contract, give the vehicle back. What are the best steps to take?
Thank you.
Shannon,
I would try talking to the finance company and seeing if they would allow you to sell the vehicle to a private party (you typically get more money than if you were to try to trade it in or sell it to the dealership) and then sign a promissory note being responsible for the remainder of the debt that you couldn’t pay back (deficiency balance) after selling the vehicle. Once you have done this you could see if you could get another personal loan at a better interest rate to then pay off the original finance company. You may also be able to settle with them if you could pull together a lump sum payment. Good luck!
I made the mistake of going under on my current loan when i traded in my used car for a new one and now the payment is just extremely high right now wanted to know my options. Been trying for a co signer and nothing is coming up reposseion is my last option would trading it in for a car lower than what this car is worth help out with my up and down loan and lower my payment ?
Giovanni,
I would recommend trying to sell the vehicle (with your lender’s permission) at a private (non-auction) sale because you will make more money than if they were to sell it. Pay the lender the money you get for the vehicle and then you may need to sign a signature loan or something like that to be responsible for the remaining balance. Try to get a loan where they don’t require that it be secured. Then you know that you only have the remaining unsecured debt to try to take care of. You can start chipping away at that and they may be willing to take a settlement of a lump sum amount for about 35% of the total amount owed. It’s a tough situation but I think you can work your way out of it. Good luck!
Hi fiance filed chapter 13 surrendered car while under bankruptcy. Was suppose to notify fiance company to come get car but never did..still has car but it’s not under his bankruptcy ans he haven’t paid in it in over a year. What will happen?
When you filed your Chapter 13 bankruptcy notice should have been provided to the creditor and they should have seen his intentions to surrender the vehicle. At times, depending on the value of the vehicle, some finance companies may chose to just let you keep the vehicle if they think it has little to no resale value. You could always contact the finance company yourself or have your bankruptcy attorney contact the finance company and let them know you still have the vehicle and need to know what to do with the vehicle. Good luck!
I am moving out of tje xountry and i still have a loan of my car, they will not let me take it out of the country. I cant find anyone to take over payments what can i do, ive tries refinancing but i only get 9000 of the 13000 i owe.what can i do
I would sell it on your own for as much as you possibly can and ask the finance company if you can sign a personal loan for the outstanding balance. You can the work on paying that amount off. You selling it on your own is going to get more out of the vehicle than if you voluntarily turned it in or traded it in.
Please help me, Two years ago i surrendered my car to the bank. Now, I need to fix my credit because I am trying to make a big purchase, unfortunately it appeared that I still owe the bank even they got my car. I called them and asked them what is the best thing to do, they told me its either i pay the whole amount, settlement or monthly. I’ve been unemployed for a long time. They told me that i need to pay them or they will put me on collection or legal. Also, i asked them if it will go away in my credit report they said no it will take 7-10 years even i am paying for monthly or settle it. What is the best thing to do? Please help.
They have the right to go after you even if you voluntarily turned in the vehicle. You didn’t say how much you still owed so it’s tough to recommend which direction to go. I would try to make whatever regular payments you can if it’s a small amount. If it’s a large amount I would just sit back and see what they do. If you aren’t employed and don’t have the money there isn’t a whole lot more you can do.
I don’t have a question but I just wanted to say props for giving out advice on this topic. I too was thinking about giving up my car, but I thought it through and just to suck it up for another 4 years till it’s paid off. Not sure i can handle all these headaches if i were to have my car repo’d or voluntarily give it up.
Thanks Jake! Just hoping we can make a tough situation a little bit easier for folks.
Jake, I think you and I have made the same decision after reading this Info, it maybe easier just to ride this out for 5 more years, uggh! I just hate paying out $633 a month for a 2014 Toyota Camry.
I have a used car (2006 kia rio5) through an independent dealer. I currently owe $6,300. on it. My warranty is almost up through them and I want out from under it because it constantly breaks down and when I take it to the dealership to get the problems fixed, they are always conveniently not covered by the warranty.
I want out from under this money pit, and have found a different big name dealership that can offer me a much newer car, for a much lower monthly payment and full 5year warranty.
I’m a single mom and can’t afford for my current car to be broken down so much.
My current vehicle has no really resale value (worth about 1200.00 blue book) and someone suggested voluntarily surrendering my present vehicle and just taking the hit so i have peace of mind for my family’s safety.
Would this be my best option?
It’s a tough call Jamie. If you are like me, my family’s safety comes before everything else. However, you will be responsible for the deficiency balance on the vehicle and the voluntary repossession will still hurt your credit. Instead of voluntarily surrendering the vehicle I would, instead, try to sell it on your own (because you can get more money than if the dealership would try to sell it) and see if the finance company will allow you to just have a personal loan for the deficiency amount. You can then try to slowly pay that amount down or, if you get a lump sum of money (from a tax refund for example), you can try to give them a lump sum for less than the full amount and see if they will accept that. However, be aware they can tax you on the forgiven debt. Read more about that here. Good luck!
Hello,
My situation is I have a car where 2 cars are wrapped in one, the payments are just too high, they are on time, but it’s just too much. My plan is to find a used car/dealer where I can get a payment more affordable if I can actually get financing and once I have that secured call them and turn in the car. I can’t do a BR until 2016-17. Is this something you heard of people doing?
It is. I think you could certainly try to do that.
I just recently voluntarily had my vehicle reposessed. I read online that one of the benefits of voluntarily doing it is that i would drop the car off at a dealership or car lot on an agreed date and time, to cut out the cost of the tow truck, storage fees, etc. Also, the embarrassment of a tow truck taking the car from in front of my place. I believe I read somewhere also that there would be something that I had to sign before leaving the vehicle.
The finance company just told me a tow truck company would be calling me, and about a week later they did. Said they would be at my house sometime after 10pm, but got there at 8:30. I didn’t sign any paperwork, just handed over the keys. I just received in the mail today the first piece of mail about this, and I have the unpaid balance, as well as estimated reposession, collection, and storage costs. I was under the impression the voluntary repo didn’t work like that. I an going through the same things as though I was negligent on payments. I never missed a payment, but I knew that I couldn’t afford it anymore. Is this being handled properly on their end?
Jim,
If they sent a tow truck to your residence they are likely going to make you pay for it. If you had brought the vehicle to the dealership or finance company then they may have been willing to waive those costs at that time. However, if they had to send someone to come and get the vehicle you will likely be on the hook for the fees and costs associated with that process. Wish I had a better answer for you. Good luck!
I have a new car, two months in on my car payments (paid 1st month and 2nd month is approaching) and I am considering turning my car in. Should I turn it over to the dealership or the lender?
Typically the lender will ask you to just turn it in to the dealership. Just be aware of the deficiency balance that will go along with turning it in early.
We are about to file bankruptcy and want to voluntarily surrender our car. It is a lease though. Do the same rules apply for a lease as it does a purchase? I know with a purchase we have 3 months before it gets repossed.
Thanks
It will really vary on the lender on how quickly they repossess. I don’t think it being a lease will make that much of a difference. I would certainly not turn in the vehicle until your bankruptcy is filed.
I leased a 2015 ford explorer 2 months ago.. the payment was manageable until my ex relocated with my kids. Now i have moved out of my GF’s home (rent free) into my own place so that i can be close to my kids. I simply cannot afford the car now and while this is a case of extremely bad timing, i am responsible for my decisions. This one is best for my Kids and not my credit or stress levels… anyway. I have options, Repo, voluntary surrender, trade in, lease swap (this wont work because the payments are very high and i’m only 2 months in.), the Dealer is also looking into options for me but i doubt they will do, or be able to do anything for me.
My question is what is the best course of action ? I am thinking of doing the voluntary surrender and getting much cheaper car before it hits my credit. But if i get hit with a huge deficiency payment i will still be in the same boat. I had a bankruptcy like 7 years ago because of the wonderful market crash mixed with a divorce… so that is not an option.
I am ok with taking a credit hit… it is my fault after all. I am also ok with paying back what i can manage… I just cant be hit with a 10k bill for a car I had 2 months.
Ken,
Depending on your other debts you could wait another year and file another Chapter 7 bankruptcy when you are 8 years out from the filing of your first bankruptcy. You could also file a Chapter 13 bankruptcy right now. That may be a good option for you (depending on other debts). Also, check out my response (above) to Shannon’s question on May 4, 2015. It gives another option. Best of luck!
I don’t have any other debts that cant be managed. It’s just the cost of living month to month. and this massive car payment. If I get hit with say a 10k deficiency bill, how likely would I be able to negotiate that down ? and in general do you know how they would go about with payment plans and working with something i can manage without putting me on the street?
I had the same situation. A lease that was extremely high because of burying two cars. Payment of $760 a month. I have kids and my circumstances changed. I went to and got another car loan before surrendering the lease. Got approved for much lower payments with a nice, reliable certified used Volvo $460. Once I secured the loan I called finance company on the lease and turned in the keys. Let the chips fall where they may! I feel a great weight off my shoulders. I made a bad decision so now I gotta deal with it. I have other debts that are managed and hope those positive debts help balance out this negative hit. Go get something lower before surrendering. Good luck!
Good recommendations Nikki!
I lease a 2015 lexus for 689.95 per mo. Since I had a negative equity on my previous trade so they gave me 48 months and put 3,000 down , now was able to purchase a brand new car for less monthly but won’t accept my lexus because they can just buy it out for 23,000 but I owe 43,000 they suggest to voluntary surrender and just pay for my current new loan doers this make a good choise.
It doesn’t. Then you are going to have a brand new car with a high payment on it and also have an incredibly high deficiency balance on another vehicle that you couldn’t afford. A car is a depreciating asset. Therefore, you don’t want to have too much of your money tied up in vehicles. If it were me, I would try to sell the expensive vehicle that you currently have for as much as possible, buy a “clunker” and work to pay off the rest of your loan balance. Once you’ve done that you would be out from under your old vehicle debts. It’s not the glamorous way to go about it but it’s the most practical if you want to get out from the vicious cycle you’re in right now. Good luck Clay!
Hi,
I am considering voluntary repo. I thought I could afford $515.36 a month but I got behind in payments because there was 3 deaths of my family in an accident and I used all my money to fly back home for a while. But the car is not under my name and I don’t want the person to get bad credit because of this. Now I dont know what to do…
Aeriel,
If you can’t afford the payment then the creditor will ultimately come back on the person who has the car in their name (assuming the loan is also in their name). Maybe you can help them pay towards the car when you financially recover? It’s a tough spot. Good luck!
Hello, I’ve had my car for three years and have three to go. My issue is this, my car is not drivable. When we bought the car it broke down two months later. Luckily the warranty covered the $3000 in repairs. It has had nothing but mechanical problems since the day we bought it. It’s been out of warranty for two years now so all repairs are out of pocket. It just stopped while driving it last week and just found out that the repairs will be around $2700. We do not have the money and I doubt we’d pay it even if we did. We can make the monthly payment that’s not the issue. We do not have the money to continue to pay on this money pits repairs so we are going to voluntarily surrender it. How do we go about doing it? It is not drivable so we would not be able drop it off anywhere. We’ve never had to do this before and just need a little advice, thank you.
Nicole,
If you are wanting to turn the vehicle in then I would just let the finance company know it is not drive and that, if they want it, they should send someone to come and pick it up / tow it away. If they do want it, you may want to see if you can get AAA or someone along those lines to tow it where they want. Otherwise, the finance company will add the towing service to the deficiency you end up owing. Good luck!
Hello, I recently went to a dealership with my mother. We signed some paper work for a car. then when we got home we realized they had added 3000 more dollars than we had agreed on. We did not walk out with the car. They had to fix a windshield and some other parts of the car that we were not aware of. A day later we received a voicemail explaining how if we didn’t finished the finalized papers our approval from the bank would get canceled. So we waited a couple days. Then we called explaining why we didn’t want the car anymore. They said they could not do anything about it anymore. Next two days they bring the car to my house with no license plates! We were not home! We called the dealer and just kept hanging up on us. What can I do?
Document, document, document. You need to make sure you are documenting everything that is going on. I would send a certified letter, return receipt requested, to the dealership stating all of the facts that have happened thus far. If you didn’t get financing approved then you shouldn’t have a loan on the vehicle anyways. Good luck!
Hello,
I am writing on here because everything I see seems to be much more detailed then the responses I have gotten from various other places.
However, I am in the process of filing Chapter 7 (will be officially filing the end of this year). I have a 2013 Subaru Impreza and owe $19,746.90 (negative equity). I have been doing good with making payments until lately. I told my Lawyer I wont be including it in the case 1. Because I needed a car 2. because my father is on the loan as the primary buyer. Now I am struggling with paying for the car and he got laid off. My insurance was supposed to be SIGNIFICANTLY lower this year (3 years of good driving), only to be told it is going up. My current car payment is $401.19 and my insurance is $146.00, which is more then 50% of my monthly income. At the age of 21 I feel this is the best thing to do right now so when the time does come.
My father on the other end, has two other car loans. If we surrender my car will they come for his other two cars? My plans are to make payments on the deficiency amount until completely paid off.
My questions are, what would you suggest? Are there any other methods you would suggest before this? My father’s credit would be clear in 7-10 years, right? He doesn’t have the best credit right now so I know this wont do too much harm I don’t believe. I have called the bank to see if they had a plan to lower my payments, in which they do but I cant do it where I am filing bankrupt.
Thanks in advance!
Sarah,
Your best bet is to probably sell the vehicle for as much as you can and then use that money to pay towards the loan on the car. The amount that the sale does not cover on the loan you will still be responsible for it. Start making monthly payments on that loan and get it paid down as much as you can.
You could also just surrender the vehicle within the bankruptcy so that way they can’t come after you and then you can help your father make the monthly payments on the deficiency balance. It will be on his credit for 7-10 years but that doesn’t necessarily mean it will hurt his credit for that long of a time. Good luck!
I recently lost my job and cannot afford my car note and insurance. However I want to save and buy a car straight out and just pay insurance. My question is can the finance company take my new car once j get it because I will eventually owe them for their car I turned in voluntarily.
Erica,
They could not immediately take your new vehicle. Instead, they would have to sue you, get a judgment against you and then attach a lien to property. Once a lien is attached to the property if you have too much equity then they could possibly come and take the vehicle. It would take them several months to go through that process though.
I have voluntarily surrendered my car but the finance company denied it because they said it wouldn’t be worth them coming to pick up. So what can I do with the car and not get into trouble if the finance company doesn’t come get it?
Anita,
I would just get a letter from the finance company stating they do not want it. You will probably be nicked on your credit report for failing to make the payments but you can keep the vehicle and not pay on it any more. They may also send you a 1099 at the end of the year saying the amount you haven’t paid should be counted as gross income on your taxes – just be aware of that. Good luck!
Great video, Melissa.
I couldn’t agree with Damon more! By voluntarily turning in car, it will more than likely be auctioned and you’ll be stuck with the remaining debt. They don’t care to get the most out of the sale of the car because they are getting what you owed either way, from the Auction or from you. Like Damon said to Clay, sometimes it takes very tough decisions, like selling something else you may have and going with a much cheaper alternative until you can pay off debt. I would recommend listening to Dave Ramsey , just google ” Dave Ramsey on car leases” or “Dave Ramsey + car payments”
I had my ex boyfriend co sign on a car for me well; we broke up now and his insurance lapse he has flags on his car. I cant get my car registered what to do my tags are dead in 3 days. is there anything I can do now?
Sheron,
To be honest, I’m not sure. I would think that his insurance lapsing on his vehicle wouldn’t cause any problems if you have insurance on your vehicle. However, I’m not overly versed in that area. I would contact the DMV and ask them what you can do.
I would like to know what I could do about, a car I co-signed on for my girlfriend. She currently quit her job, and won’t be able to continue paying on the leased 2015 Hyundai Elantra. I would like to know what is the best options to take, as I will not be able to keep up with the payments myself, and she has yet to find a new job. Also I would like to know, what would be be the best way, to avoid negative marks on my credit. Please help.
Frank,
Unfortunately, there isn’t a lot that can be done. You guys could try to turn the vehicle in and then pay off the debt. Since you co-signed they can go after you for any or all of the payments. I wish I had a creative idea but…I don’t. That’s the danger of cosigning on property for someone else, even when they are well intentioned.
My mom’s boyfriend just passed away. He went in debt for a car in North Carolina in 20012, his name is the only name on the note. They moved to west Virginia for me to take care of him while he battled cancer. They have been together for 7 yrs and the car has not been paid off and his daughter is trying to take it even if he hasn’t paid for it bringing his loan to void can she legally come and get it or how would that work
It depends if he has a will. If he does then that would be followed. If the car payment isn’t made then the finance company could come and get it through a repossession but as long as nobody cosigned on it they couldn’t go after anyone else.
With the oilfield going down I lost my job and with my illness I can’t work much so I don’t afford my truck what my best option?
Falan,
I would try to sell the vehicle in a private sale for as much as possible and pay that to the finance company and then make monthly payments to the amount that you cannot pay off.
I have a couple questions for you. My husband and I got out of a chapter 13 two years ago and immediately purchased a vehicle and paid 2500 for a warranty. Long story short vehicle has had major problems for the two years we have had it with the most recent being the computer portion of the vehicle not working. Van has been in the shop for over 2 months. Total of 5 months in the shop within 2 year period. Warranty is not covering but drive time is offering us 1100 of the 3300 to get it out of the shop and tacking on 800 to the back end of our 25% interest rate loan. We simply do not have the money to get out of the shop and now they are threatening to repo. It has been a nightmare do not sure what to do. At this point drive time is going to have to pay to get it out of the shop. Luke our best bet be to file chapter 7 to get out of it? We still owe over 10000 for a lemon but because of Ohio lemon law it is not covered because it is preowned. What can happen if they repossess it while in the shop. For 3300 we could just buy a car outright!!!
Sharon,
They can go after you for any deficiency balance that exists. If they have to get the vehicle out of the shop they could potentially go after you for that as well. Depending on any other unsecured debts a Chapter 7 bankruptcy may make sense to at least explore as an option.
So I financed a car when I was living out west, about a month into it my job laid me and several other employees off and as well they deemed my apartment building unfit and evicted everyone there holding out securities. I was forced to drive all the way back across the country with 48 hour notice and just got back to work. I want to trade my SUV in and still maintain a higher value to pay off the loan but also get another vehicle rather than be a 22 year old who declared bankruptcy
You can try to trade the vehicle in but you will end up paying the negative equity you have. You could surrender it and get another vehicle but they could come after you for the deficiency balance. I would try trading the vehicle in and ask the finance company if they can give you a low interest personal loan for the deficiency and you pay that back as a monthly payment. It’s not a good option but it may be the least poor option if you’re trying to avoid bankruptcy. Having a repo and the resulting deficiency balance on your credit may be just as bad.
I surrendered my vehical it was sold sued for remainders made a payment plan then one thing after another and I can afford to make th we payments is there anything I can do to stop the wage garnishments
Work out a payment arrangement with them where they agree to stop (non likely) or file a bankruptcy. It will stop wage garnishments when the automatic stay goes into place.
I am planning on filing either chapter 7 or 13 next fall. I recently traded in my SUV for a more affordable sedan. I had to commute a lot and put tons of miles on the car. It is now upside down about $10,000 due to the mileage. I would like to purchase another vehicle but was told no one would role that much negative equity into my new loan. Someone suggested I purchase the new vehicle as a second the let the first go back to the bank. If I were to do this, would I be able to include the deficiency balance in my BK in the fall? Or, would I be able to relinquish at the time of filing, the purchase a new one? I don’t mind the higher payments but I want to be settled in a vehicle that works best for me and my family. Would love your thoughts.
Matthew,
If you surrender the vehicle with the high milage and negative equity within the bankruptcy then they generally cannot come after you for a deficiency balance. The new (to you) vehicle that you purchase would need to be reasonable with monthly payments of less than $450 per month (typically).
I have a question I turned in my car ahead of time because I cannot make the payment because I was short on rent and they still took out the money from my account even though I no longer have the car I called them and told them I don’t have the car and I need my money back they said well we’re sorry the money was taken and there’s nothing we can do about it is that legal or should I consult with an attorney
Jesus,
If you gave them permission to pull money from your bank account then they could take the money as a regular monthly payment. I would get your money out of that bank account and put it in a new bank account they don’t have access to. Typically finance institutions would stop taking money from accounts once the collateral was surrendered. They would then have to sue you for the deficiency balance to come after additional money that was owed. Practically speaking, you could fight them on what they’ve done but you may end up paying more to have an attorney represent you than the money you lost. Good luck going forward!
I still owe 13k on my truck loan. Trucks only worth 6k when motor still worked. I want to know what I should do? Without a repo mark on my record. What way can i get it voluntarily given back to bank without having that bad mark on my record? Please let me know so I can do this fast thanks!
If you do a voluntary repo it’s going to ding your credit. The only way to prevent a negative credit mark is to pay the loan back.
What if I’m financing a car, but then I get a job offer outside the country and can’t take the car with me?
Technically, I’m not filing for bankruptcy or having any financial problem paying for the car, but I don’t feel like making payments on a car I’m not here to drive.
What would be the best course of action for me?
It depends how far upside down you are. If you can sell it and pay off the loan then that is the best option. If not, you can sell it and pay off as much of the loan as possible and then only be responsible for the deficiency amount. (You would have to get the finance company’s permission to do this.)
I BOUGHT A CAR, AND I CAN NO LONGER AFFORD IT. IF I TURN IT IN I KNOW I WILL STILL BE RESONSIABLE FOR THAT AMOUNT BUT CAN THEY GARNISH ME OR WOULD WE JUST SET SOMETHING UP? REALLY SCEARD, BUT CAN NOT AFFORD IT
It depends what the laws are in the state you are in. In North Carolina they cannot garnish your wages if your employer is based in North Carolina. I would look up the wage garnishment laws specific to your state. Good luck!
Hi my name is Richard Urena. When I bought my vehicle through a finance I was in the military and paying off the monthly bill was no hassle. But, no I am no longer in the military and paying off the car MO they and the insurance is very hard to do. If I were to donate the vehicle to an organization and still pay off the loan but save money on gas, insourance and maintenance would I be able to get away with it without having to worry about my credit history? Since I won’t be letting the car get repossessed?
Hey Richard,
You can try to do that but you will have to get the permission from the finance company to donate it. I’m not sure they would be willing to do that since they wouldn’t want to give up the title to the vehicle to someone else until they have been paid off. However, if they are willing that would be fine. You could also just park the vehicle and cancel insurance on it if nobody will driving that vehicle. Good luck!
In your experience do auto lenders issue a 1099 for the deficiency balance once a vehicle is sold due to repossession? I surrendered my vehicle in 3/2013 and have been working on reestablishing my credit. I was recently served with a lawsuit for a finance loan (SOL is 5 years in FL) and now have to determine if I should look at bankruptcy as an option or attempt to settle. Issue is if auto finance company issues 1099 it will set me back drastically.
If they don’t feel like they can realistically collect then they usually will write off the debt and send you a 1099 and you will be taxed on that “forgiven debt” as if it were income for you. Bankruptcy will make it so that does not happen to you.
We have just got our car repossessed on April 20, 2017. We owe about $26,000.00. On, April 22, 2017. We called to see how much it would cost to get our car back. The finance company said, it would cost $45,00.00 plus repo fees. We I have never had anything like this happen to me. So, we are going to see if we can get a car before this hits my credit. Would chapter 11 or 13 help to get the car back? Or should we just get another car. We live in Georgia and my husband works in downtown Jacksonville. We have to have a car for him to go to work. Thanks. By the way. We got into this situation due to my husband’s employer not paying him the hours he works. He makes good money if they would pay him correctly. He works for Florida Blue as a IT Securties Specialist. He’s a contractor for a company call BTG, Inc. I’m so tired of these people treating him like this. And looking like a dead beat concerning our bills. My fico score has tanked almost 200 points in the past 9 months. All of our credit is mainly me. Thanks, for reading this.
A Chapter 13 bankruptcy would help you get the vehicle back if it’s filed quickly enough. Once the Chapter 13 is filed the creditor (loan company) would have to file a proof of claim stating the amount owed and showing how they got to that amount. If you’ve had the vehicle for more than 910 days (2 and 1/2 years) then you can potentially cram it down and pay back what it’s worth and not what is owed on it. Good luck!