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I can't afford payments on a repossessed vehicle and the company is issuing a summons. How should I deal with this?
I co-signed a loan with my grandson for a car, which was later repossessed. Neither of us can afford the payments. I have nursing home fees, which are piling up, and the company is now issuing a summons. What are my options here? Will the company be able to put lien on my property?
When a vehicle is repossessed, the lender will sell the car at auction and apply the sale price at auction to the amount that you still owe on the original car loan. If the auction does not net enough money to cover the full balance of the note, which it rarely does, then the original borrower would owe the difference, called a deficiency balance, to the lender. The creditor can collect on the deficiency balance like any other unsecured debt, up to and including filing a lawsuit against the borrower. Once a judgment has been obtained, bankruptcy is one of the few definitive ways to prevent the creditor from proceeding with executing on the judgment, which can include wage garnishment, property liens, and bank levies.
However, the creditor may be willing to work with you to establish a repayment plan which you can afford, to help you avoid bankruptcy. If you want to try to repay this debt and prevent further collection efforts by the creditor, I would encourage you to contact the creditor to discuss possible repayment arrangements. The creditor may be willing to forgo further judgment execution if you can commit to reasonable regular monthly payments. However, if you cannot, or are unwilling to, make payments, it is likely that the creditor will continue to try to execute on its judgment, in which case a bankruptcy filing may be your best option.
Given the length of time the creditor can enforce its judgment, and the fact that it is again trying to garnish your wages, a bankruptcy filing may be the best solution to resolve this debt. However, many factors must be considered before deciding to file bankruptcy, such as your income, your assets, your expenses, and your future plans. I strongly encourage you to consult with a qualified bankruptcy attorney in your state to help you determine if bankruptcy is a practical solution to your financial troubles. While it is true that bankruptcy will appear on your credit profile for 10 years from the date of filing, you may find that the benefits of ridding yourself of this debt outweigh the negative impact that filing for bankruptcy protection is likely to have on your credit rating.
As I mentioned earlier, consult with a lawyer to learn what action this creditor can take against and if bankruptcy is a viable solution. I also invite you to visit the Bills.com Debt Help page for more general information and suggestions about how to deal with mounting debt.
I wish you the best of luck in resolving this outstanding account. I hope this information helps you Find. Learn & Save.
Best,
Bill
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Did you know?
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q1 2024 was $17.69 trillion. Student loan debt was $1.60 trillion and credit card debt was $1.12 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
The amount of debt and debt in collections vary by state. For example, in Arizona, 27% have any kind of debt in collections and the median debt in collections is $1903. Medical debt is common and 12% have that in collections. The median medical debt in collections is $719.
To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.
