“Dear Steve,
I am a single Mom struggling with putting 3 kids through college. Every year I seem to get further in debt. I am currently buying a used car through one of those ‘bad credit’ companies, and am getting raped financially.
In order to pay tuition this fall, I stupidly (I know) let my insurance lapse on this car. The day before I was going to reinstate it, my son got in an accident with it, and it’s not drivable.
My question is, do I continue to make payments and try to scrape together enough money to fix it. Or let it be repossessed and take another hit on my lousy credit?
I’ve already purchased a good used car (for cash). No car payment there. I am desperate to sort this out and have no one to ask.
I make pretty decent money, but live paycheck to paycheck. No frills, no cable, no credit cards, etc. My rent payment is high until my lease is up and I can move.
Catherine”
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The Answer
Dear Catherine,
My hat is off to you. Making ends meet with three kids in college is almost beyond impossible. You are a strong should to be able to make that happen.
The problem with the current situation is if you let the car be repossessed then the lender is going to sell the car at auction, get a little bit of money for it and then come after you for the remaining due on the auto loan.
One approach to dealing with the situation is to let the car get repossessed and then follow that up with a bankruptcy. If you had other debt lingering you could address everything at the same time. There are a lot of factors though that I don’t know about your situation that would impact that decision. If you decided you wanted to explore that option I’d suggest you click here to find a local bankruptcy attorney and talk to them for free to figure out if that’s a reasonable approach for you.
Do you have any other debt or is your struggle simply just covering the basics from month to month?
Just based on only what you shared, if you can afford it and you don’t have other lingering debt you’d discharge in a bankruptcy, the best approach would be to get the car repaired rather than repossessed.
Please post your answer in the comments section below.
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