About to let the car go, big negative equity need help please

[codeman]

SO ill try to sum this all up the best way i can..

I'm 27. No negatives on my credit score (is 720)
I financed a mustang October of last year when I was making more money. Needless to say, I traded in a car (i know mistake) and took a hit. IF I sold the car today I would be 17-20g Negative...(ouch). My current payments are way to high ($666.00...irony huh?), re-financing wont do much Its already at 4.9%, for 6 years. (yes I finance 40k.. wow.. i know )

I have minimal credit card debt (about 1,500) never been late on a payment for a thing, and have 3 cars paid off under my credit.

Basically I have to get rid of this car... I got to get another.
I got approved for a 10k loan to get another car which im looking at doing shortley and letting the Mustang go Voluntary Repo.

Honestly, I dont plan to pay the negative off.. its so much $ It would take me 4-6 years and in 7 years the repo will be off my credit so might as well just wait/.. right?


I really need advice, what is the best thing to do here. Im worried the bank will come after me for the loan balance. I tried calling the bank asking them to let me sell it and just payy off the remainded they said no. I am currently paid up to date.


What to do? All advice is very much appreciated... hate to say it.. but it F*d myself

[jpg7n16]

Honestly, I dont plan to pay the negative off.. its so much $ It would take me 4-6 years and in 7 years the repo will be off my credit so might as well just wait/.. right?

I really need advice, what is the best thing to do here. Im worried the bank will come after me for the loan balance. I tried calling the bank asking them to let me sell it and just payy off the remainded they said no. I am currently paid up to date.

Yes, the bank will come after you for the money you borrowed. And they should.

Just imagine what you would do to someone who borrowed $40,000 from you and signed an agreement to repay you -- but decided it was too much money to pay back, and they didn't feel like paying you anymore, so just stopped paying. Wouldn't you take them to court? Don't they owe you your money??

They will likely sue you for the balance, and they will win. You owe them that money.

Voluntary Repossession Questions, Answers and Solutions

What to do? All advice is very much appreciated...

If I were in your shoes, given your situation, I would keep the car, and pay back what you owe. I would also strive to make a higher salary to pay off the debt faster.

Most car loans are 5 year loans anyways, yours is 6 years. That's not insane, that's normal.

[disneysteve]

I don't think we can answer the question adequately without seeing your budget. Are there places you could cut spending to help pay the loan? How many jobs are you working?

I agree with everything jpg said. You owe this money. If you don't pay it, the bank should sue you and they should win. You need to get a second job and slash spending to get this cleaned up. And you certainly shouldn't go out and borrow another 10K. Amazing that you even qualify for that loan when you can't afford the debt you already have.

[Petunia 100]

SO ill try to sum this all up the best way i can..

I'm 27. No negatives on my credit score (is 720)
I financed a mustang October of last year when I was making more money. Needless to say, I traded in a car (i know mistake) and took a hit. IF I sold the car today I would be 17-20g Negative...(ouch). My current payments are way to high ($666.00...irony huh?), re-financing wont do much Its already at 4.9%, for 6 years. (yes I finance 40k.. wow.. i know )

I have minimal credit card debt (about 1,500) never been late on a payment for a thing, and have 3 cars paid off under my credit.

Basically I have to get rid of this car... I got to get another.
I got approved for a 10k loan to get another car which im looking at doing shortley and letting the Mustang go Voluntary Repo.

Honestly, I dont plan to pay the negative off.. its so much $ It would take me 4-6 years and in 7 years the repo will be off my credit so might as well just wait/.. right?

I really need advice, what is the best thing to do here. Im worried the bank will come after me for the loan balance. I tried calling the bank asking them to let me sell it and just payy off the remainded they said no. I am currently paid up to date.


What to do? All advice is very much appreciated... hate to say it.. but it F*d myself

For the amount of money you will still owe, the lender will sue you, obtain a deficiency judgment, and then come after you for the amount owed. There is no question that they will win, you signed a contract. There are several ways they can collect, including wage garnishment. You will owe the difference between the loan balance and whatever amount they sell the car for at auction (quite possibly less than blue book value), plus repo fees and court fees. You can expect to owe an additional 5k - 10k in fees. You're going to owe them 30k or more for a car you no longer own. I suppose it is possible they will simply shrug and say "oh well, let him keep the 30k he owes us", but I doubt it. This is their business, they do it all the time, and for balances much smaller than 30k.

I think selling the car NOW is a good idea. You will avoid repo and court fees, wage garnishment, and YOU control the selling price. (To an extent, obviously a willing buyer will only pay what the car is currently worth). To do so of course, you will have to borrow some money elsewhere to cover the negative equity.

Your other option is to just keep the car, pay for it, and drive it a long time.

Sometimes we make poor financial choices. I have certainly made a few. Learn from this and use it to make better financial choices in the future.

I agree that you should be looking at your entire financial picture. Are there areas you could make cuts to help get out from under this car?

Best of luck to you.

[Bob B.]

Hi. I'm speaking as someone who was in terrible financial shape 18 months ago. I'm still in far less than ideal financial shape, but things are improving very well each month.

Listen to these guys. If you don't take control of your financial habits, and pay off your debts, things will never get better for you.

I would bet there is some money in your budget that can be cut out. We've not had TV for about two years. We're doing OK without it. I'm not even sure that we'll sign up for service once we are financially fit. Stop eating out. Don't borrow more money. Cut up your credit cards. Pay off the Mustang loan. Keep the car til the wheels fall off.

When you're done you will have accomplished something you can be proud of. You will not have skirted your responsibilities.

[esterdsl]

Deficiency Judgement

After your car is repo'd the lender will sell it and sue you for the difference - deficiency judgement.

if you owe $40K and they sell the car for $25K they will sue you for the remaining $15K. You have to be careful with this, if they win which will be the case more than likely they could garnish your bank account or your pay-check.

A deficiency balance or the difference between what you owe on your vehicle loan and what your creditor receives from selling the vehicle after a vehicle repossession, can be included in a debt settlement plan. A debt settlement plan can also include other types of unsecured debt such as credit card balances, medical bills, personal loans, liens and other delinquent accounts.

[codeman]

Ive cut all my cost down. I dont eat out, spend about $50 a week in food, I dont have t.v. just internet. After my bills (not including food or gas) I have 400 a month. Once the car is repo can i claim bankrupsy? I have one other friend that let a car go repo and they never came after him, it just screwed up his credit. Yes i want to pay my debt... more importanty i want to afford to eat and pay my electric bills.

Its not that i dont "want" to pay it off. its that I cant. I was making a good 6oo more a month when i bought the car. I had a job for 7 years and got laid off. I dont own a home, i live in a studio apartment.

[Petunia 100]

Ive cut all my cost down. I dont eat out, spend about $50 a week in food, I dont have t.v. just internet. After my bills (not including food or gas) I have 400 a month. Once the car is repo can i claim bankrupsy? I have one other friend that let a car go repo and they never came after him, it just screwed up his credit. Yes i want to pay my debt... more importanty i want to afford to eat and pay my electric bills.

Its not that i dont "want" to pay it off. its that I cant. I was making a good 6oo more a month when i bought the car. I had a job for 7 years and got laid off. I dont own a home, i live in a studio apartment.

Codeman, if bankruptcy is an option, go speak to an attorney who specializes in bankruptcy before you do anything. Laws vary from state to state, so do not rely on message board advice from well-meaning folks who are not attorneys and likely do not live in your state. Initial consulations are often free, but even if you have to pay, it is worth it.

Bankruptcy is a big decision. Make sure you understand all the ins and outs before proceeding. If you do decide to proceed, follow your attorney's advice to the letter. You don't want to do anything incorrectly only to discover later that you threw a monkey wrench into your bankruptcy proceedings.

[jpg7n16]

Ive cut all my cost down. I dont eat out, spend about $50 a week in food, I dont have t.v. just internet. After my bills (not including food or gas) I have 400 a month. Once the car is repo can i claim bankrupsy?

Over $17,000-20,000?? Really? You want to destroy your financial life for the next 7 years for a few thousand dollars?

You speak of bankruptcy as though it's no big deal, but how would bankruptcy affect your life?

7 years of terrible credit, plus unlimited years of it being on your resume, plus higher interest rate a home purchase down the line, plus more difficulty even getting approved for a mortgage, plus etc. = not worth $20k

It only takes a couple years to get rid of. And since you make more than your expenses, you may not be able to discharge it in bankruptcy anyways. You'd may get a debt repayment version of bankruptcy, and even up ruining your financial life, and still having to pay it off.

I have one other friend that let a car go repo and they never came after him, it just screwed up his credit.

And did he owe $20k more than what his car was worth? And did he technically have the income to support repayment?

You'll find that a lot of people will give you advice based on THEIR situation, not YOURS. Your situation is unique and different.

Yes i want to pay my debt... more importanty i want to afford to eat and pay my electric bills.

Its not that i dont "want" to pay it off. its that I cant. I was making a good 6oo more a month when i bought the car. I had a job for 7 years and got laid off. I dont own a home, i live in a studio apartment.

That's not how it came across. It seems like you CAN (given enough time) - but you don't want to take the 4-6 years to do it (at current income levels)

Honestly, I dont plan to pay the negative off.. its so much $ It would take me 4-6 years and in 7 years the repo will be off my credit so might as well just wait/.. right?

In the end, if your budget is as you say, then I stand by my original advice:

I would also strive to make a higher salary to pay off the debt faster.

[disneysteve]

I financed a mustang October... at 4.9%, for 6 years

I dont plan to pay the negative off.. its so much $ It would take me 4-6 years

Its not that i dont "want" to pay it off. its that I cant.

Again, I'd say we can't give accurate advice without seeing your budget. You've made conflicting statements. First you said you could pay it in 4-6 years. Then you said you can't pay it. Which is it? We don't know without seeing the numbers.

If you truly can't pay this money, that's an entirely different situation than if you can but choose not to.

[DebbieL]

I think this person has already decided they don't want to pay off the debt. I don't think that you should be able to easily get away with that. The bank should sue for the difference.

I'm kind of surprised that after only 6 months the car would have depreciated to the level that the poster is saying. Do they really lose a full 50% (or so) of their value in only 6 months? I know cars take a big hit depreciation-wise when you drive them off the lot, but I wouldn't have thought it would be that much. Damn, how come I never see any great bargains on 6 month old vehicles, lol?

[Petunia 100]

I'm kind of surprised that after only 6 months the car would have depreciated to the level that the poster is saying. Do they really lose a full 50% (or so) of their value in only 6 months? I know cars take a big hit depreciation-wise when you drive them off the lot, but I wouldn't have thought it would be that much. Damn, how come I never see any great bargains on 6 month old vehicles, lol?

It could be that they person paid too much, or that negative equity from the trade-in was rolled into the loan, or both.

[DebbieL]

It could be that they person paid too much, or that negative equity from the trade-in was rolled into the loan, or both.

In that case, dumb financial decisions are nothing new for OP? Maybe they will learn from this (but not if they're wanting to just walk away from it and hope it won't affect them negatively).

[bjl584]

If you let the car get repoed, then file bankruptcy you may not have to pay back the negative. It depends how the law works in your state. You will want to speak with an attorney.

Just be warned, bankruptcy will stick with you for 7 years. Your credit will suffer and things will be more expensive. So be warned. It may be wiser for you to pick up a part time job to boost your income and get out of this mess on your own.

[disneysteve]

Just be warned, bankruptcy will stick with you for 7 years. Your credit will suffer and things will be more expensive. So be warned. It may be wiser for you to pick up a part time job to boost your income and get out of this mess on your own.

Absolutely. Filing bankruptcy over 15 or 20K makes no sense. A simple PT job would clean this up.