How to Get Out of Debt With the Get Out of Debt Guy » repo

Nissan Motor Acceptance Corporation Repossessed My Car. – Tammy

Steve Rhode — Thu, 28 Jul 2011 21:41:47 +0000

“Dear Steve,

I got out of the Army in the beginning of March. In May, after I realized I couldn’t keep up with a $600 a month car loan, I contacted Nissan Motor Acceptance Corporation and asked if there was a way to get lower payments.

I explained my situation to them and also informed them I am living off of disability and unemployment, to include asking: is there a way to lower my payments until I find another job. The customer representative who “helped” me told me she could defer my payments for three months, i asked what that meant and she said they would take three payments and put it at the end of my loan. I told her that would be great and if that was the end of my pay issues, she said yes.

In August I got a job and started my payments again. From May to now I haven’t received a statement or any type of written communication for NMAC. I have requested to have my statements mailed to me or if NMAC can update my online information , they never did.

Fast forward to July 2011, I was shopping with my nieces for school when they repossessed my car. Since it was Saturday, I couldn’t get any information from NMAC. When I contacted them on Monday they said I was three months behind. I asked how is that possible and they stated I was behind for May 2010 to August 2010.

I informed them that it was to be deferred to the end of the loan, but they said I never signed the documents. NMAC will not give me back my car or let me pay the behind payments. NMAC said it was my fault for not following up on my document process, even though I wasn’t informed I was supposed to sign papers.

I have three credit cards that need to be paid off; the total debt I’m in is about $24,000. Also my credit report shows me being 120 days late on payment for Nissan.

When NMAC auctions my vehicle and leaves me with a huge payment due, can this be covered by a debt management plan? Or is this balance still considered a secured loan, which then disqualifies me for a debt management plan? Can I dispute the 120 days late on my credit report? I have documentation that shows I have been paying monthly, I just didn’t know I was three months behind.

Tammy”

The Answer:

Dear Tammy,

The deficient amount they will come after you for will be pretty big. Considering your current state of being on disability and unemployed you might want to consider bankruptcy and close the door for good on the past debt. Here is a link for some pro bono bankruptcy clinics that might be able to help for a reduced cost.

The 120 days behind does not sound that far off since Nissan appears to be claiming you never had a fully executed deferment agreement.

The big question now is do you want to deal with all the debt now or continue to deal with it over the next five years.

What is the ultimate goal you want to achieve on your path out of debt?

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

I Made a Partial Car Payment But They Repossessed the Car Anyway. – Denise

Steve Rhode — Tue, 28 Jun 2011 21:35:04 +0000

From How to Get Out of Debt

“Dear Steve,

I made a partial car payment and I called the car company and told them the rest of the payment was in the mail and on it’s way a few days later they came and reposed it so they have my money and the car Now they want me to pay for the repo I think they are trying to get over on me

Do I have any rights should I contact a lawyer?

Denise”

The Answer:

Dear Denise,

A partial car payment does not protect your car from being repossessed. I suspect you were behind and that this was not the first time your loan was not current.

The car lender is allowed to sell your car at auction and then go after you for the difference between the low auction sale price and what you currently owe on the car.

By all means you should contact a local attorney to make sure they followed the appropriate procedures for repossessing a vehicle in your state.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

I Am Filing Bankruptcy But My Attorney is Waiting For Stuff From Me. – Brent

Steve Rhode — Fri, 22 Oct 2010 18:34:30 +0000

From How to Get Out of Debt

Brent

“Dear Steve,

I consulted an attorney 2 months ago about bankruptcy and retained them to proceed with the process. I have only 2 more item to give the attorny before they proceed. I have fallen behind on my car payment and they repoed it yesterday.

I am wanting and needing the car back very bad, as I am fixing to move from my address and start college in the fall. I fell on bad times about 2 years ago when I lost my job and I am now having to go back to school to get another degree. How can I negotiate to get my car back? And shouldn’t my bankruptcy attorney help me in this matter?

How to get my Car back from repossesion?

Brent”

The Answer:

Dear Brent,

You sound as if your bankruptcy attorney has a duty to fix this mess for you about the car, they don’t. This could have been avoided if you had filed two months ago before the car was repossessed and then the bankruptcy attorney would have assisted you to keep the car as long as you were making the regular payments.

You’ve got two choices today, you can either come to an agreement with the car lender to get your car back, and when you hand your attorney the last two items they need, tell them about the car issue.

Once you make the decision that bankruptcy is the right solution, don’t drag your feet. If you do, stuff like this will happen.

Big Hug!

@GetOutOfDebtGuy

I Purchased a Car With My Ex-Husband That I Can’t Afford Anymore. – Yvonne

Steve Rhode — Wed, 01 Sep 2010 21:18:34 +0000

From How to Get Out of Debt

Yvonne

“Dear Steve,

I had purchased a vehicle 3 years ago with my now ex-husband at the time he was going to help me with payments which were 265.00 per month and to this day are still the same and I still owe 8400 on a vehicle that is only worth 4000.

I can’t make the monthly payments anymore. I was out of work for 6 months and just started working again making $8.00 an hour the most I get in hours every week is 25 if I am lucky. With the job market the way it is I have applied everywhere trying to get a higher paying job.

I only receive 240 in child support every month. I am actually negative in my bank account for a bounced check for my son’s school I am trying to repay that and they charge fee after fee and it’s not helping me. I pay 500 a month for my son’s school which I had searched for cheaper ones and didn’t have much luck and that’s with Florida VPK program. I also owe on my credit card that I can’t pay even pay the minimum amount on at the moment.

Are there any solutions to these issues. I have cut back as much as I can. I want to try to trade in my vehicle but, I am afraid it may result in a higher payment every month that I can’t afford I have no problems down grading but the negative equity may be an issue. Thank you

Yvonne”

The Answer:

Dear Yvonne,

I had to do some research about the Florida VPK program was. Apparently it is the Voluntary Pre-Kindergarten program. I read through the site about Florida VPK and noticed that it said that the program was free for all four-year-olds.

The VPK program is FREE for eligible children, regardless of family income. Providers are not permitted to charge a registration fee or require parents to agree to any additional services. State law does not, however, prohibit a provider from charging registration fees for programs or care that are not part of the VPK program.

I think the likely chance of you trading in the old car for a newer one is slim. If you could find a Florida car dealer to take your current car back as a trade for a lower priced car, the difference between what your trade-in is worth and the amount you owe on it would be lumped into your new car loan. The payment on the new car would be even higher.

What you’ll probably have to do is find a less expensive car and purchase it, and then turn in your old car to the bank in a voluntary repossession. When the old car lender starts chasing you for the balance due, which they will, you could then look at bankruptcy as a permanent and legal solution to your issues.

Alternatively, since the vehicle is in your ex-husbands name also, maybe you could persuade him to help to pay for the car so you can keep it rather than turning it in. If it was a joint loan then they will go after him for payment as well and he might just prefer to avoid that.

Big Hug!

@GetOutOfDebtGuy

I’m 3 Months Behind on My Car Payment and 7 Months Pregnant. – Juanita

Steve Rhode — Tue, 27 Jul 2010 16:01:31 +0000

From How to Get Out of Debt

Juanita

“Dear Steve,

I have a car that is 3 months behind and a credit card because i moved to another state and wasnt able to work because i was 7 months pregnant now i can pay the payment but not enough to get caught up.

How can i get caught up without loosing my car and messing up my credit?

Juanita”

The Answer:

Dear Juanita,

If you are already three months behind on the car payment, your credit report is already messed up. No need to worry avoiding that now.

The best way to get caught up is going to be some negotiated solution with the car lender. Call the lender, explain your situation and ask what options are available.

However, call quickly, people that are three months late often find their car has been snatched back by the repo man without notice.

Good luck with the upcoming new baby and with working something out with the lender.

Big Hug!

@GetOutOfDebtGuy

Repossession: Why It Happens, What You Can Do, and Your Rights Before, During and After

Amanda Miller — Mon, 07 Jun 2010 13:51:10 +0000

From How to Get Out of Debt

If you fail to make payments on a car loan, or anticipate a problem paying in the near future, you should be familiar with the process of repossession and what rights you may have. This article will cover your rights before and after repossession, starting with the security agreement you signed when you bought the car and ending with your rights after a creditor sale of your car.

Specifically, this article will answer the following:

How does the creditor have a security interest in your car and what does this mean?
How can you default on a loan?
When can you reinstate the contract or redeem the car?
Do you have rights to be notified before repossession?
How can you stop self-help repossession?
What are your rights before and after the sale of your vehicle?

It is important to know that every state has a different mix of laws on this subject and the rights discussed in this article may or may not be available in your particular state. You must check with an attorney in your state to see which of these rights is available to you.

Did You Sign a Valid Written Security Agreement?

A car can only be repossessed by the lender that took the car as collateral for your loan. None of your other creditors can repossess your car unless you have a security agreement that specifically states your car is collateral for that loan. For example, if you are delinquent on regular credit card debt, the credit card company cannot repossess your car to collect the credit card debt.

When you buy a car using a car loan, you sign a security agreement. For the agreement to be valid, it must describe the type of “collateral” (the car) and the value given, and you must have “rights to the collateral.” (You have rights to the collateral if the car belongs to you, not to someone else.) Accordingly, if a parent buys a car for her daughter, the daughter has all rights to the collateral and must sign the security agreement. If the daughter does not sign the agreement, there is no valid security interest and the creditor may not be able to repossess the car.

It is important to check the agreement to see if there are any mistakes or omissions. If there is a mistake in the security agreement that makes the agreement invalid, the creditor cannot repossess the car, even if you defaulted on the loan. You should have received a copy of the agreement at the time you bought the car, but if you no longer have a copy of your security agreement, you can ask your creditor for a copy. Although you may not have a legal right to another copy of the agreement, you should contact your local attorney general or consumer affairs office if you believe there may be a problem with the agreement and your creditor won’t give you a copy.

Did You Default on the Loan?

Before a lender can repossess your car, you must default on the loan. The usual way that a consumer defaults on a loan is by failing to make a monthly installment payment. But there are other ways that you can default, and these are spelled out in the security agreement that you signed when you bought the car. Some examples include: failing to purchase insurance, losing or destroying the car, selling the car or moving the car to another location without the lender’s permission. If you don’t understand why or how you defaulted, you should look at your agreement to see what constitutes a default.

There are occasions where you may default under the agreement but your creditor still cannot repossess your car. Many states find that if the creditor has accepted late payments from you before, the creditor cannot later declare that you defaulted without giving you reasonable notice. In other words, the creditor would have to tell you that it would consider all future late payments as your defaulting on the loan.

In addition, there can be no default if the “underlying obligation is extinguished” (you paid off the loan), the contract is voided under the laws of your state or if you notified the creditor that you are withholding payments because of the creditor’s breach of warranty. You should check your state laws for additional rights since your state may further restrict the grounds for default.

Did the Loan Accelerate?

Assuming you defaulted by not paying on the loan, it is important that you know whether or not your security agreement with the creditor has an “acceleration clause.” Once a loan has accelerated, you can no longer “cure” the default by just paying the past due amount. Instead, the lender can demand the entire balance of the loan due or repossess the vehicle. Your state law determines whether or not your creditor must warn you beforehand that your loan will accelerate and whether or not your creditor must tell you that you have a “right to cure” the default.

The first thing you should do is check your security agreement to see if there is an acceleration clause. A loan will only accelerate if there is an acceleration clause between the debtor and the lender. If there is no acceleration clause in the agreement, the creditor can only demand that you pay the past due amount. The acceleration clause must be clear in the agreement and state that if the consumer meets one of the grounds for acceleration as defined in the agreement, the creditor may accelerate the debt. Grounds for acceleration can include such things as: your commencement of bankruptcy proceedings, your refusal to allow the creditor to inspect the car or your default on the loan, as defined in the agreement.

Upon acceleration, the full loan amount would become due immediately. It is unlikely that a consumer could come up with that sum in a short period of time and acceleration almost always results in default on the total balance of the loan. At that time, the lender can repossess and sell the car to recover the total remaining loan balance.

The creditor can even accelerate “at will” if he truly believes your prospect for payment is impaired. For instance, if the creditor believes the car has been abandoned, the creditor can accelerate at will to recover the total amount owed. Before a creditor can do this, he must perceive a deterioration of the consumer’s financial condition since the loan was made. Check your agreement for a provision allowing acceleration at will.

Did You Get Notice of Acceleration and the Right to Cure?

Under the terms of your agreement, the creditor may not have to tell you that your loan is accelerating. Most agreements have a provision waiving the consumer’s right to notice of acceleration.

Accordingly, a creditor can demand that you pay the full amount of the loan and could repossess the car without ever notifying you. Check your agreement. If there is no waiver, the creditor must notify you after default to tell you that the loan will accelerate, and give you a reasonable opportunity to pay the defaulted amount before acceleration.

Even if you waived notice of acceleration in the agreement, you still may get some help from your state laws. Some state laws — usually called “right to cure” laws — require notice before acceleration, and these laws override the waiver provisions of your agreement. Under a right to cure law, the creditor must allow you to pay back payments plus delinquent charges and reinstate the loan within a particular amount of time before the note will accelerate. This means that your creditor would have to give you notice before acceleration AND give you the chance to correct the situation.

If your state does not have a right to cure law and you waived your right to notice in your security agreement, your creditor still may have to tell you about your right to cure the default. The waiver may not stand if there is any inconsistency about a right to notice in other provisions of the agreement. For instance, the waiver would be invalid if there are provisions in your agreement that mention “on demand,” implying that you have the right to notice of a right to cure.

State laws may further restrict grounds for default and acceleration and may specify the number of times that you may have the right to cure.

Was the Creditor’s Self-Help Repossession Lawful?

If there was a valid security interest, you defaulted on the loan, and the loan accelerated, you risk creditor repossession. In most states, a lender can seize a car without first having to go to court. This is called “self-help repossession.” Creditors must comply with many technical requirements to repossess your car in this manner. Some state requirements that may protect you against self-help repossession include:

Express consent. Some states do not permit repossession without the consumer’s express consent (usually in the signed agreement). You consent if you specifically knew of the creditor’s right to repossession and specifically knew that the creditor could repossess your car without having to go to court first.
Military personnel or dependents. If you are in the military or are a dependent, you are protected by the federal Soldiers’ and Sailors’ Civil Relief Act. This law, however, provides only temporary and partial relief. If you bought a car before you entered the military service and default on your car payment while in the military, your creditor must take you to court to repossess the car. However, your creditor can still use self-help repossession to repossess a car that you bought while you were in the military. But you still may be protected in another way: standard military policy requires that any repossessor entering a base must be accompanied by military police. If you are present during a self-help repossession, a court may find that the presence of a military official forced you to consent to repossession, which is wrongful repossession.
Native Americans. Native Americans may be protected if tribal law prohibits self-help repossession.

Did the Creditor Breach the Peace During Self-Help Repossession?

A creditor cannot breach the peace when he repossesses a car. Breaching the peace includes many situations, such as:

Touching or pushing you.
Damaging your property during repossession.
Tricking or lying to you, in some states. A few courts have held that laws cannot encourage lying and trickery to repossess collateral. Courts are divided as to whether a repossessor can trick you to take your car. In one instance, a creditor breached the peace when he pulled the debtor’s car to the side of the road, rode back with the debtor to the dealership and seized the car while the debtor was inside. In another case, a creditor breached the peace when he lied and said he was a government official. However, some courts have found that there was no wrongful repossession when the creditor lied and said he was taking the car for repairs.
Threatening you if you feel immediate fear. For example, a creditor’s threat to seize your car at some future time does not put you in immediate fear, so there is no breach of peace.
Ignoring your objections. If you, your relative or your friend objects to the repossession but the creditor still repossesses the car, he breaches the peace. You should object at the time the creditor takes the car. If you object after the creditor took the car, it is too late. If a sheriff or other government official is present, don’t resist his seizure of the car, but verify the official’s authenticity.
Entering a closed garage. Even without physically breaking in, a creditor breaches the peace when he enters a closed garage. Generally, there is no breach of peace if the creditor takes the vehicle from the public street, a parking lot, a private driveway, an open garage or a carport. A creditor’s trespass can be a breach if there is a potential for immediate violence.
Police presence. If the creditor brings a police officer not through a paper of the court and the presence of the officer so intimidates the debtor as to have “forced” him to consent to repossession, the creditor breached the peace.

Your state laws may further limit who can engage in self-help repossession. For example, a state law may permit self-help repossession by licensed personnel, employees of the creditor or automobile dealers only.

If your creditor wrongfully repossesses your car or breaches the peace, depending on your state and its laws, the court may not allow the creditor to keep the car or to collect a deficiency, may stop the subsequent creditor sale of your car and may force the creditor to pay you for the market value of the vehicle at the time of seizure, or pay for damages for your loss of use, mental anguish or inconvenience. You could also be reimbursed for attorneys’ fees.

Note: Unsecured Property Repossessed with the Car. Cellular phones, stereos and other items attached to your car can be repossessed only if the security agreement specifically covers these items. The creditor must return personal property and is liable for any loss of use of property or any damages to property while in the creditor’s custody. If your creditor seized unsecured property with the car, you should inventory the missing property and demand its return.

If your creditor refuses, you can sue the creditor for the property’s value, for your loss of use or for any damages to the property while it was in the creditor’s custody.

Did the Creditor Properly Dispose of the Car After Repossession?

After repossession, there are six possible ways that the creditor can dispose of your car.

Reinstatement. After repossession, your state law may give you the right to reinstate the contract by paying the amount past due. If this is the case, the creditor must give you notice of your right to reinstate and the amount due. You have a particular time period, usually 15 days following repossession, to reinstate the contract. You may only get one opportunity to reinstate a contract. If the creditor does not comply with reinstatement procedures, he may be barred from later obtaining a deficiency judgment and may even owe you money.
Redemption. Every state gives you a chance to redeem your car by paying off the entire loan plus reasonable repossession and storage charges at any time before your creditor sells or otherwise disposes of the car, even if you had voluntarily surrendered the car. A written waiver of the right to redeem is ineffective unless you signed a written waiver AFTER you defaulted on the loan. Unfortunately, this right to redeem does not help most consumers who have their cars repossessed due to money troubles and cannot come up with a large lump sum of money. Before you redeem, you should know the loan amount, repossession fees, costs associated with the sale, and reasonable attorneys’ fees and legal expenses. If the debt has accelerated, the creditor is not entitled to unearned interest or insurance payments that are not owed because the note has been paid off early.
Remember: you may be better off buying your car at the repossession sale than redeeming. The sale price at a creditor sale may be less than the amount you owe. However, you will still be liable for any amount of your loan obligation and repossession costs that are greater than the sale price of the car (the deficiency).
Strict Foreclosure. Your creditor could keep your car in satisfaction of your obligation, which is called “strict foreclosure.” If your creditor elects strict foreclosure, you would not owe the creditor any payments, although your creditor can keep all prior amounts that you paid. If the creditor intends to elect strict foreclosure, he must tell you in writing. You can object to strict foreclosure in writing within a certain amount of time, depending on your state, usually within 21 days of the notice. You should object to strict foreclosure if you believe that you or the creditor could get a sale price that would cover the remaining amount that you owe plus any repossession, reconditioning and sale costs.
If your creditor has repossessed your car but has not disposed of it in any way, it may no longer be worthwhile to sell the car. You can argue that the creditor, in effect, elected strict foreclosure because his holding onto your car for so long made a subsequent sale commercially unreasonable. This is called “constructive strict foreclosure.” If you successfully argue constructive strict foreclosure, your creditor would not have a claim to any deficiency. Even if you live in a state that does not have laws on constructive strict foreclosure, many courts will treat the creditor’s repossession as extinguishing the debt for the value of the car if they do not dispose of the car within a reasonable period. (See “delay of sale” under the discussion of Creditor Sale).

If you have paid at least 60 percent toward the car, your creditor cannot elect strict foreclosure.

Judicial Sale. A creditor could dispose of your car though judicial sale. A creditor will rarely do this since it adds extra court costs and a creditor can generally sell the car without having to go to court first.
Consumer Sale. Your creditor may allow you to sell the car. You should take advantage of this if you believe that you can get a better price on your own. In fact, it may be unreasonable for a creditor NOT to let you sell the car if you can get a much higher price than your creditor.
Creditor Sale. The final way that a creditor can dispose of your car is by selling the car at a public or private sale. During the sale of your car, the creditor must follow certain rules. If the creditor does not, you can sue the creditor to stop the sale and to recover money damages. Two of the most important rules are: (1) the creditor must give you notice of the sale, and (2) the sale must be “commercially reasonable.” Both of these rules are discussed in detail below.

Did You Get Notice of the Creditor’s Sale?

Notice of sale is very important as it tells you when you will no longer be able to redeem your car. If you do not act before the date of sale, you will lose the car. Notice of sale may be the first time that you hear from your creditor after repossession, if you waived your right to notice of acceleration or if your state does not have a “right to cure” law.

The creditor must give “reasonable notification,” which means he must give you sufficient time to take appropriate steps to protect your interests. The timing of notice differs in each state, but creditors usually give notice of sale 10 days beforehand. The notice must be written and accurate in every respect, and most courts require that it specify whether it will be a public or private sale and give details of where and when the sale will take place.

Some courts have barred the creditor from collecting a deficiency judgment where the creditor failed to send the debtor notice even though the debtor actually knew about the sale from another source. Courts have also forced the creditor to pay the debtor the amount that the sale price is diminished because of inadequate notice.

Was the Creditor’s Sale Commercially Reasonable?

The creditor sale must be “commercially reasonable” in every way. Commercial reasonableness is not defined, but it is more than creditor convenience. Commercial reasonableness includes the following:

Creditor use of car. A creditor’s use of the car before sale could be commercially unreasonable. When the car is in the creditor’s custody, the creditor has a duty to use reasonable care. If the car is destroyed while in the creditor’s possession, the creditor may no longer be entitled to any deficiency. In general, the creditor cannot drive the car unless it is to preserve the car’s value — never for personal reasons.
Creditor reconditioning the car. It may be commercially unreasonable for a creditor to sell the car “as-is” if preparing the car in some minimal way could significantly increase its value. The creditor may have to “recondition” the car, including polishing, cleaning, tune-ups and paint touch-ups. At the same time, you should make sure the creditor does not put too much work into reconditioning the car, because you will end up paying for all reasonable expenses of car preparation for sale. The amount of reconditioning should be proportionate to the value of the car or must result in a significant increase in the sale price.
Creditor delay of sale. The creditor cannot unreasonably delay the sale of the car. If the creditor holds onto a car for too long, the creditor may be barred from collecting any deficiency and may have to accept the car as settlement for the rest of the amount due on the loan. (See “strict foreclosure” under Creditor Disposition). On the other hand, a sale that is too hasty could be commercially unreasonable if it results in inadequate advertising or in a failure to produce a sufficient number of bidders. If the debtor already paid 60 percent or more of the loan, the sale must be within 90 days. To determine whether a delay is commercially reasonable, check how much the car has depreciated during the delay, and consider the storage costs and other seasonal and regional variations.
Creditor choice between public and private sale. The choice between a public and private sale must be commercially reasonable and must maximize sale proceeds. However, a low sale price by itself is probably not enough to prove that a sale was commercially unreasonable. You should check wholesale pricing guides, like the publication put out by the National Automobile Dealers Association, to determine whether a sale price was commercially reasonable.

The creditor must make the car available for inspection before a public auction. If you see that a creditor’s preparation for sale is clearly inadequate or if the creditor appears to be selling to itself at a low price, you can try to stop the sale. At a public sale, you can bid for your car. You can also offer to purchase your car at a private sale.

Is There Any Deficiency After Creditor Sale?

After sale of the car, the sale proceeds would first be applied to the reasonable expenses of repossession, then to reasonable expenses of the sale, then to satisfaction of the debt. Whatever is left over (the surplus) must go to the debtor. If there is not enough to cover all these expenses and the remaining debt, the debtor may owe the creditor the amount of the loan and expenses that exceed the sale price, called the deficiency. Under state laws, however, the creditor’s right to a deficiency may be restricted. Some state laws preclude the creditor from getting a deficiency, or may limit the deficiency amount if the creditor elected “strict foreclosure,” if there was a commercially unreasonable disposition of the car, or if the creditor did not comply with specific notice requirements under state law.

If you owe a deficiency, you should recalculate the deficiency amount to make sure it is correct. Make sure the following is accurate:

The remainder due on the loan before adjustments. Obtain the original credit documents, recalculate the total amount due and make sure the credit rates are not higher than your state limits.
Unearned interest rebates. The total payment of a pre-computed loan includes interest payments over the full loan term. When a creditor accelerates the loan payments, the creditor is seeking payment earlier than scheduled so the amount of interest that you owe decreases. The creditor should rebate this unearned interest to you, and the rebate should be computed based on a formula specified in the loan agreement or based on state law, whichever is more favorable to you, as of the date of acceleration.
Interest and penalties after acceleration. After rebating the unearned interest, your state’s laws or the credit agreement may authorize the creditor to charge interest on the amount due from the date of acceleration until you repay this amount. It depends on state law and the contract, but usually late payment charges will not be permitted after the time of acceleration or at the time a deficiency judgment is rendered. A creditor cannot charge both late-payment and extra-interest charges for the same period.
Prepaid insurance premiums. You should cancel any prepaid insurance and get a rebate. Also, you should make sure that the creditor does not charge for reconditioning and repairing a car if it is covered by the car’s service contract or extended warranty.
Value of car. Make sure you are credited the sale price of the car at retail, not the estimated value.
Expenses from repossession and sale. All expenses must be reasonable, including all repossession, storage, repair, reconditioning and advertising expenses. The creditor cannot charge you more than the amount the creditor was actually charged. Expenses for sale should be the same as for the creditor’s non-repossessed cars. Any attorneys’ fees and legal expenses must be reasonable and are governed by the credit agreement and by state law.

When You Can’t Make Your Vehicle Payments

Amanda Miller — Thu, 27 May 2010 13:55:57 +0000

From How to Get Out of Debt

If you find yourself unable to make your vehicle payments, you’ll want to act quickly. In most states, if you miss a payment, whether you have bought or leased the vehicle, the lender has the right to repossess it almost immediately.

Here are some strategies to consider when your vehicle payments become too much, including what to do if it is repossessed.

Negotiating With the Lender

If you’ve missed a payment but the lender hasn’t repossessed the vehicle or declared you in default, or if you’re current on your payments but know you won’t be able to make them for a couple of months, call the lender and ask if it’s possible to get an extension of your agreement. An extension lets you skip a few payments now and have them tacked on at the end of the agreement. Usually, to get an extension the following must be true:

your purchase or lease agreement is not considered in default
you have made at least six payments under your agreement, and
you agree to pay a fee for the extension — fees vary among the various lenders and dealers; you may be charged a flat fee, such as $50, you may be charged a percentage (often around one percent) of the outstanding balance or you may be required to pay up to one month’s worth of interest.

If the lender is not willing to grant you an extension, he may rewrite the agreement to reduce your monthly payments. Occasionally, you can get a reduction in the interest rate. More often, however, you are simply given a longer time to pay what you owe. This will increase the total interest you will pay.

Getting Out of Your Purchase Agreement

If your agreement is for the purchase of the vehicle, as opposed to leasing it, and you know you won’t be able to make your payments for several months, your best bet is to try to get out of the agreement. There are two ways you can accomplish this. The best idea is to sell the vehicle on your own. The worst idea is to give the vehicle back to the lender — a sort of voluntary repossession.

Selling on Your Own.

When you sell a vehicle without having the “pink slip” (until the vehicle is paid for in full, the motor vehicle department keeps the pink slip) you will have to get the lender to sign off on the sale. If the vehicle is in good condition, you can probably get top dollar for it — at least the top dollar that the vehicle is worth. If the sales amount doesn’t cover the total amount you still owe the lender, you may have to come up with the difference before the lender agrees to the deal. If you’re flat broke, out of work and lacking in any assets, the lender may sign off and waive the balance owed.

Giving the Vehicle Back.

If you’re inclined to just give the vehicle back to the lender, think again.

Giving the vehicle back doesn’t end your obligation. The lender sells the vehicle at an auction, where it is unlikely to bring in even half of what it is worth (it is mostly used vehicle dealers who attend auctions and they have a motive to keep the bids very low). The difference between what you still owed the lender when you returned the vehicle and the amount brought in at the auction is called a deficiency. It’s usually several thousands of dollars. And you are liable for it.

Getting Out of Your Lease

Over one-third of new vehicle drivers lease, rather than purchase, their vehicles. Although leasing isn’t for everyone, some people swear by it for three reasons:

Lease payments are lower than loan payments for the same vehicle.
Leasing gives you the chance to drive a more expensive vehicle than you could afford to buy.
If you like to drive a new vehicle every few years, you will pay much less by leasing rather than buying.

But leasing has serious disadvantages.

First, if you continually lease your vehicles, you will have never-ending vehicle payments.

Second, if you decide to buy the vehicle at the lease end, you’ll pay several thousands of dollars more than if you had bought initially.

Third, most leases charge you as much as 25 cents a mile if you exceed the annual limit — usually between 12,000 and 15,000 miles. If you do extensive driving, you shouldn’t lease.

Fourth, not all leasing costs are disclosed up front. While a federal law called the Consumer Leasing Act requires lease agreements to include a statement of costs, many lease agreements are ambiguously drafted with key provisions buried in the fine print. And the law does not obligate a dealer to disclose the interest rate that’s been built into your payments. To find out the interest rate on a lease, you will have to ask the dealer for something called the leasing factor. Multiply that factor by 24 and you’ll get the approximate interest rate.

Fifth, getting out of your lease can cost you a bundle. If you want to cancel your lease, look carefully at the provision describing what happens if you default or want to terminate the lease early. The provision probably states that you’ll owe an amount of money based on a given formula. If you were to calculate the sum, you’d find that it was several thousands of dollars. It’s really nothing other than a penalty for breaking your agreement with the dealer.

The Consumer Leasing Act gives you the right to cancel the lease if the termination formula is so complex that you can’t easily figure out how much you owe. But this will be hard for you to assert with success. Lawyers for vehicle manufacturers have rewritten lease contracts to avoid most of the ambiguities because of successful consumer lawsuits. You may not like the amount you come up with, but it shouldn’t be all that hard to figure out what the amount is.

But maybe the dealer used an old lease agreement or added some terminology making the termination formula too complicated for you to figure out what you owe. In that case, write to the dealer stating that you want to terminate the lease early. State further that the termination provision of the lease agreement is ambiguous and that you know you are entitled to sue for damages because of the dealer’s failure to use a reasonable formula. Finally, state that you are willing to waive your right to sue for those damages if the dealer will waive the balance you owe. It’s unlikely that the dealer would concede 100 percent of the early termination penalty, but he may be willing to negotiate with you to reduce the amount you must pay or at least to let you pay it off over time.

If the Vehicle is Repossessed

In most states, your vehicle can be taken one minute after midnight the day after your payment was due — without any warning. In about a dozen states, the lender must send you notice that you are in default of your loan or lease agreement and give you a very short period of time to make up the missed payments before grabbing your vehicle.

Despite what you might have seen at the movies (remember the cult film Repo Man?) laws do regulate how vehicle repossessions are to take place. A repo man can use a duplicate key or hotwire your vehicle.

Furthermore, he can take your vehicle from your carport or unlocked garage. It’s illegal to break into a locked garage. The repo man knows that people avoiding repossession tend to park their vehicles within about three to five blocks from their home. Repo men find vehicles quickly.

Once your vehicle is taken, you usually will have a very short period of time to redeem it, that is, get it back by paying the entire balance due. The lender or dealer may let you redeem the vehicle by reinstating the original contract, as long as you make up the missed payments, late fees and the cost of the repossession and storage.

The lender or dealer will probably not let you reinstate the contract if any of the following are true:

you’ve had the agreement reinstated in the past
you lied on your credit application
you hid the property to try and avoid the repossession
you haven’t taken good care of the vehicle, or
you were violent with the repo man

The lender or dealer must usually send you a notice of your right to redeem the vehicle. If you don’t redeem it in the allowed time, the lender or dealer may sell it at a used vehicle auction, where it will bring in maybe one-third or one-half of its value. And you’re still liable for the difference between what you still owe and what the vehicle sells for unless you can prove any of the following (often as a defense in a lawsuit where the lender or dealer sues you for the deficiency):

the lender or dealer routinely accepted late payments from you and then repossessed without warning
you were not told of your right to redeem
you weren’t told of the date and place of the auction sale, or
the sale wasn’t conducted in a “commercially reasonable” manner. No one really knows what this means and courts generally rule that auction sales of repossessed vehicles were done in a reasonable manner for that industry.

If your vehicle is repossessed, do what you can to redeem it, if for no other reason than to sell it yourself and avoid the deficiency. If you wind up owing a deficiency, try negotiating for a reduction of the amount or an agreement to pay it off over time.

My Husband Bought a Truck Two Years Ago. He Can’t Pay For It Anymore. his Father Cosigned. – Brandy

Steve Rhode — Fri, 09 Apr 2010 20:36:10 +0000

From How to Get Out of Debt

Brandy

“Dear Steve,

Almost 2 years ago, my husband bought a truck before we were married for a little over $34,000. His monthly notes are roughly $600 due to his bad credit even though his dad was a co-signer.

This was okay until a few days ago when he was laid off and now realizes that there are barely any jobs that are hiring right now. On top of this, thanks to the recession the amount owed on the truck is around $29,000 but the KBB value is around $22,000 at best. So, we cannot sell it to pay off the loan, and we really cannot afford this note any longer, especially since we have a 4 month old son and other bills to worry about.

What are my options other than surrendering this vehicle to the bank? HELP!

Thank you,

Brandy”

The Answer:

Dear Brandy,

Before you consider giving the vehicle back to the bank you should talk to your father-in-law about the situation. Once you had the truck back and it is auctioned, the bank will go after your father-in-law for probably $16,000 or so that will be due. This will probably be the difference between the loan balance and the wholesale auction price.

Since your father-in-law was silly enough to cosign for the truck he would be much better off to help make the truck payment until your husband found a new job. It might be painful but trust me, it will be significantly less expensive than the crap that will rain down on him with a repo.

If your father has good credit he may want to consider refinancing the truck with his credit at a lower interest rate to lower the monthly payment. Try a site like Eloan for refinancing options.

Big Hug!

@GetOutOfDebtGuy

Should I Let the Loan Company Take the Truck? – Cindy

Steve Rhode — Fri, 19 Mar 2010 23:11:51 +0000

From How to Get Out of Debt

“Dear Steve,

The car loan company was going to work with me but faxed by papers on a Saturday (last day of the month) when I was not at work so they say they can’t help me now. My husband is out of work.

Should I let them take the truck back? I will then owe the difference because the loan is far higher in price then the value of the truck? what should I do?

Cindy”

The Answer:

Dear Cindy,

I think what you should do has already been decided for you. I would imagine that outside of wining the lottery or having a family member bail you out, the truck will be taken back by the loan company since you are apparently unable to make the payments.

I’d just wait for the truck to go back and then when they hit you with the big bill, go and talk to a bankruptcy attorney. Chance are that you are not going to be able to afford the big bill you’ll get after they auction the truck off so bankruptcy is the most logical way for you to dispose of that debt.

Big Hug!

@GetOutOfDebtGuy

Repo Men Recovering Cars On The Fly With High Speed Cameras

Steve Rhode — Sun, 28 Feb 2010 16:06:54 +0000

From How to Get Out of Debt

Some amazing new technology out lets the repo companies snag repos on the fly without having to do it the old fashioned way of hunting the car down.

New technology by MVTRAC allows repo vehicles to read license plates of cars parked or passing them. When the system goes “ch-ching” the driver knows they have a car to pick up. The driver can then snag the car or follow the driver till they stop and park to snag the car.

Now, if your car is in danger of being repossessed you need to be concerned if you are even driving it down the street.

At the core of this technology-intensive trend is a set of high-speed digital cameras mounted on the hood and trunk of a vehicle that snap pictures of license plates while passing other vehicles, even at 80 miles per hour. Photos of the plates (including the time the photo was taken and the car’s GPS coordinates) instantly pop up on a laptop computer inside the repo man’s vehicle. Optical character recognition software converts the plate numbers to text.

The process gets more technical: the plate numbers are checked against an encrypted database of delinquent cars, compiled from lenders and stored on the computer, which is refreshed continuously using a wireless link.In most cases, the license plates photographed are attached to cars with no payment problems. But when a plate on a wanted list is found, the computer screen displays further information, including the make and model, its vehicle identification number, or VIN, and the name of the lender. The data is used to confirm that the right car has been found — scofflaws sometimes swap license plates, for instance. – Source

And using new technology repo trucks cars can now be recovered by a 16 year old in as little as eight seconds, even parallel parked, without the driver even leaving the truck.

@GetOutOfDebtGuy

Can My Lender Repossess My Car in Another State?

Steve Rhode — Wed, 24 Feb 2010 17:03:06 +0000

From How to Get Out of Debt

“Dear Steve,

Due to some financial challenges, I have been behind my car note for almost 4 months in the State of Tennessee and the Credit Union wants to repossess the car. I told them I’m not in town because right now I’m in another state (Maryland) with the car for a program. They called me and requested to tell them where the car is so that they can come and pick it up. I’m trying to make arrangement with them, but they don’t want to accept that. My question is can they repossess my car in another state?

Can my creditor repossess my car in another state?

William”

The Answer:

Dear William,

There seems to be no doubt that you are delinquent on the car payment. The issue becomes really complicated for you if the lender feels you are intentionally hiding the car to avoid repossession. If it is determined you are then you may be guilty of a fraudulent conversion or removal of property to avoid repossession and that can land you in court. If the lender asks, you must disclose where the car is now. They will probably hire a local repo agent to come and get it.

The sooner you hand the car back at this point the less additional fees and charges will be added on.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Nildo Has Moved Back in With Parents And Wants to Save His Car From Repossession

Steve Rhode — Fri, 05 Feb 2010 22:42:27 +0000

From How to Get Out of Debt

Nildo

“Dear Steve,

Because of a job change, that pays only commission I got myself into this mess. Now I have to move back into my parents home and lose my car. It pays good commission but I have had 3 bad month and now I don’t know what to do

How do I get out of this mess and save at least my car?

Nildo”

The Answer:

Dear Nildo,

There are some absolutes in this world. For example, if you want to drive a nail into hard substance, it will require some force. If you don’t want to burn yourself on a hot pan from the oven, don’t grab it with your bare hand. If you want to keep your car, you need income.

I appreciate how much you want to keep your car but it is a function of the lack of income that is going to cause you to lose it. The good news here is that you are taking some steps to reduce your other expenses, like moving back in with the parents.

If your current commission based job isn’t paying the bills, you’ll have to look around and see if there is another job that might allow you to earn more.

Sadly, the hardest time to effectively sell is when you are desperate. Inspiration is always a more effective approach, rather than desperation.

The only hope for saving the car is going to be to negotiate a mutually agreeable repayment plan with the auto lender that you can afford. If they are not willing to offer you a plan that you can afford, you are probably going to lose the car. Don’t do anything stupid like hide the car to avoid repossession. If it is going to be snatched up, see if you can offer to drop it off and save some of the repossession costs, which you will be billed for anyway. Also make sure to take all your personal stuff out of the car now and leave it out so if the car is repossessed at a moments notice that you don’t need something in the car that you’ll have to struggle to get back.

If the car is repossessed then you will get a big bill for the repo costs, costs of the sale, and the difference between the amount of the loan and the amount received from the sale of the car at auction. This could be a very big bill.

Big Hug!

@GetOutOfDebtGuy

The Answer:

I’m a Low Income Single Mother With a Disabled Son and Collectors are Chasing Me. – Milla

Steve Rhode — Thu, 04 Feb 2010 21:19:03 +0000

From How to Get Out of Debt

Milla

“Dear Steve,

I had a car that was repossed around 2005. The car was sold but the creditors are coming after me saying I have to pay around 7,00 with interest of $43 monthly.

They had the sheriff come to my home with some court papers. I also had to fill out some papers the sheriff sent to my home, stating my income, living situation etc…A judgement was made against me without my knowledge, I found out because the creditors told me and now the creditors are saying I have to pay about 270 monthly which is impossible for me to do being that im a unemployed low-income single mother of 6 children. My income is very little, only income is SSI which I receive for my disabled son.

I really don’t want to file for bankruptcy but I may have to. The court papers I filled out, my income was exempt so the creditors know that it’s no way for me to pay that kind of money but yet they are harassing me with these letters and even called my house once. They have access to my credit report so I believe thats how they got my Phone#. My credit is really bad I diputed everything on my credit still waiting for response.

Is there any help for my situation besides bankruptcy? Is there any help for low-income people like myself.

Milla”

The Answer:

Dear Milla,

Ironically I just got off the phone with the sister of one of my longest friends. She is facing a similar situation. In her case the statute of limitations has expired on some old debt from an unfortunate time in her life but the collectors are chasing her still, with a vengeance.

In her case, like yours, the reason that bankruptcy is a reasonable consideration is that it will close the door forever on these old debts and allow you to focus on making today better for you and your family. It sounds like there is no reasonable expectation that you will be able to repay this debt.

However, from what you have shared, there is no reason for you to go bankrupt except for the mental relief it will provide you. It does sound as if you are “judgment proof” with no assets to go after.

My suggestion would be for you to meet with a local bankruptcy attorney, for free, and discuss the situation with them. Only then can you make an informed decision about what to do.

Big Hug!

@GetOutOfDebtGuy

My Credit Union is Suing Me for Repoed Car. – Liz

Steve Rhode — Thu, 04 Feb 2010 19:05:07 +0000

From How to Get Out of Debt

“Dear Steve,

I had a 2006 Honda Accord EX and a signature loan from my credit union. I got laid off and couldn’t make either payment. The CU put both loans together at one point, but I still couldn’t make the payment, so I voluntarily returned the car.

They sold the car, and I still owe $22,000, which I cannot pay. My husband works, and I am on state disability. We have no assets as we rent and our other 2 cars are being paid off. We have a checking account that we take down to the almost zero each month.

We received a summons saying that the CU is suing us last week. I have 30 days to reply.

We filed BK in CA in 2005.

What are our options? What can they do to us? Can I get an attorney for this?

Liz”

The Answer:

Dear Liz,

They could win their suit and garnish his wages for starters if the car loan was in joint names. Unless you either pay the debt in full or enter into a payment arrangement for the past debt you can afford then your only option that gives you any protection is going to be a Chapter 13 bankruptcy.

While you might not have any assets to speak of right now, you will in the future. A judgment against you will sit there and get bigger and bigger as the interest charged on the judgment grows.

You should click here to find a local bankruptcy attorney to discuss this with. This is a serious situation, don’t delay in getting legal advice.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Mary Had Her Motorcycle Repoed And Wants Your Advice

Steve Rhode — Fri, 29 Jan 2010 20:24:32 +0000

From How to Get Out of Debt

Mary wrote in and asked the following question.

“I had a motorcycle repossessed and sold at an auction. They want me to pay the entire loan and a debt collection agency has taken over. What are my options? What is the best thing to do?” – Mary

Mary,

I wish I had some amazing advice for you to make all of this go away. But I don’t.

When you took out the original loan the motorcycle was pledged as collateral to help guarantee the loan. But if you failed to make your motorcycle payments they could take the bike back and sell it at auction.

The amount they get at auction is subtracted from the remainder of the loan, plus repo fees, storage charges and miscellaneous B.S. charges.

The situation gets even more ridiculous, the amount of the loan written off by the lender becomes taxable to you, you’ll owe income tax on that amount, just as if you earned that money.

And while you would think the lender would be motivated to sell the bike for the maximum amount possible, they just unload them at auction and go after you for the balance.

You have a few options:

Enter a Debt Management Plan. Now that the lender has turned this into an unsecured debt you could have someone else negotiate with them to work out a repayment plan.
Talk to a Bankruptcy Attorney. You might decide that the motorcycle debt, on top of everything else you might have is just too much for you to be able to deal with. Bankruptcy is a legal option and one that you should investigate by talking to a local bankruptcy lawyer.
Do Nothing. Doing noting isn’t really a solution but it is an option.
Negotiate With the Lender. You could always try to work out a payment plan with the lender that you could afford. What concerns me about this is that typically a motorcycle payment is not that expensive so if you could not afford that, I bet you have other bills you are struggling with.
It would be a mistake to make a repayment promise that you are unlikely able to continue to make over the following years if you are just getting by as it is. In that case, talking to a bankruptcy lawyer is probably the smartest thing to do right now.

The worst part Mary is that you’ve lost your ride. Taking some trips on the bike right now might actually help to ease your worry and stress. Nothing like a good set of twisty roads to make you forget your worries and feel like you’re flying.

If you have a question you’d like to ask, send it to me here.

How Can I Get the Car Repossession Lawyer to Accept My Settlement Offer? – Garlena

Steve Rhode — Sun, 17 Jan 2010 23:31:47 +0000

From How to Get Out of Debt

Garlena

“Dear Steve,

I cosigned for my son a car in 7/25/2001. We were in an accident, and the car was repossessed on October 3, 2006. The car was sold by private sale at Southern California Auto Auction. They said the vehicle sold for $1000.00, or 19% of the then book value of $5075.00. The Total Contract amount was $42,905.40 (less credits before repossession $31,161.17), plus expenses and charges $924.87, equals balance at breach $12,669.10, less credits before suit $1000, equals principal sued for $11,669.10.

On 11/7/2008, MacDowell & Associates obtained a default judgment in the total sum of $14,953.94. I wrote MacDowell & Asssociates a Settlement Offer for the amount of $3000.00 to settle this entire matter. They telephoned me back and said they would take $4000, but that would only dismiss me from the case and not my son. I told them I had to think about it. My son has no money, and I am 67 years old on disability retirement. If, you can please help me. Is there anything else I can do??

Garlena”

The Answer:

Dear Garlena,

Actually that seems like a pretty reasonable offer for them to release you from this debt. Pay what you can agree to and let the lender go after your grandson for the rest. You are not doing him any favors by shielding him from his responsibility. Or, you can go bankrupt to end your responsibility for your grandsons debt. This is actually his mess and he will need to step-up and take some responsibility for it.

I would suspect they’d take $3,500 if you promised to deliver the check within 48 hours of acceptance. If you go for the settlement be sure to get a written confirmation that you are release from this settlement. The settlement has already hurt your credit and you’ll want to make sure that you can show it was satisfied on your part in case the issue comes up in the future.

The problem here is that there is no force or leverage that you can put on the holder of a valid default judgment. They have the upper hand and obviously you have some assets they can go after if you can write that check.

In order to have an agreement you need to have a meeting of the minds. Both parties must come to an acceptance that the offer is acceptable to both. Until that happens, you have nothing.

Repeat after me, “Never Ever Cosign.”

Big Hug!

@GetOutOfDebtGuy

I Work at a Car Dealership and Think My Truck Will Have to be Repossessed. – Kristi

Steve Rhode — Fri, 08 Jan 2010 00:34:41 +0000

From How to Get Out of Debt

Kristi

“Dear Steve,

I bought a truck 3 years ago on 5 year loan. Since, my husband and I have moved out of state where I began working for a car dealership. We then purchased a truck for him with my employee discount. The owners of the dealership were then forced to sell the business, and I was hired by the new owners, but have now had my hours and income reduced to the point that my husband and I are struggling severely to pay our bills.

I am now late in paying the loan payment on my truck every single month and most months on his too, and when we do pay them, we end up having to pay other things late. We just can’t afford both of these vehicles anymore. I know I owe more on my truck than it’s worth, so can’t sell it, and am stressed to the point that I’m ready to just tell them to come get it but the idea of having a repossession makes me sick too.

I know I would still owe them money if I did that, but at least there would be a light at the end of the tunnel. Is there any other way? I’ve looked into part time work to try to get through this and there’s just nothing right now. I would trade it in for something cheaper, but that would entail prompting my employer to check my credit, which is horrible at this point I’m sure and may affect my employment with them, and going to another dealer would definately be frowned apon.

Is there any way to avoid repossession on this? Is re-financing for a lower payment and bringing it back up when my job gets back to normal a possibility?

Kristi”

The Answer:

Dear Kristi,

I certainly can appreciate how you might feel, working at a car dealership and potentially losing two vehicles to repossession. The personal stress must be pretty high.

If I could get you to take a step back from your personal situation for a moment and look at what is happening to car dealerships all around the country, maybe I can help you put this in perspective.

The auto sales industry has been knocked off its foundation recently. Nearly 2,000 dealerships are going to be closing up or at least losing their Chrysler and GM products. A car dealership is on the hook for a tremendous amount of money. Between the employee costs there are the hard costs for building, land, rent, electricity, etc, the loss of a product line can be a death sentence. Without a product to sell, these dealerships are headed for a total loss of assets and bankruptcy. Emotionally traumatic as well. I expect we will hear of more than one dealer owner suicide before it is all over.

I would think that the most important hurdle for you to cross is not dealing with the vehicles, but getting yourself back into a mindset and positive outlook where you can begin to sell with gusto again. It is always much harder to sell out of desperation than inspiration and your customer can feel your stress.

In other times in our economy the refinancing approach might have been possible, but not now. I honestly think that you are probably headed towards a repossession and once the truck(s) sell at auction you will be slapped with a big bill. The most logical way to deal with that is going to be to go bankrupt to discharge that debt that you will certainly not be able to pay.

It sucks. It really does. Pain is pain and it is what it is. But let’s put this situation into perspective. If I gave you a choice between having your legs sawed off or losing the trucks to repo, the repo doesn’t look so bad, does it?

You’ll be able to get some new wheels. You might have to buy some beaters for cash in the short run to get you guys around. After my bankruptcy I drove an old postal jeep for a while. Funny, I miss that old thing that I donated to the fire department to burn up. Maybe the dealership you are working for has a couple of trade-ins they would not mind selling to you through a payroll deduction?

The least of my worries is about your credit and job at the dealership. I’ve helped so many people over the years that have been finance managers at dealers and they’ve struggled with their own debt problems. You are not alone.

Besides, retail sales people seem to have a propensity towards financial problems.

Consider yourself unlucky but part of a growing club of people that have suddenly found themselves in a really crappy situation with no great way out.

The sooner you can just see the situation for what it is and surrender to it, the sooner you can begin to let go of this situation and your stress and instead turn around and start looking forward to a brighter future.

Please let me know what you decide to do.

Big Hug!

@GetOutOfDebtGuy

I’ve Gotten The Alimony Lowered But Still Neck Deep in Debt From the Divorce. – Steve

Steve Rhode — Wed, 06 Jan 2010 16:11:57 +0000

From How to Get Out of Debt

“Dear Steve,

I came to Texas for employment after 7 months of unemployment. Leaving my wife behind, she refused to come here. My new job came to an end after 4 months and faced 4 months of unemployment, the job market was in Houston so I stayed and was employed again by GE Energy. Still my bills from 11 months of unemployment where extremely high, backing it work until my wife filed for divorce and was awarded 3k a month in alimony. I since then met a woman who is real, loving but has 5 kids, she works but her income is limited. I have since had my truck repo’d since I could not make the payments. Living off of 1600 a month was not good. I haven’t been able to find a part time job and we are now in jeapordy of losing our house which we rent. How can I get back in control and make sure we have a roof over our heads?

Is there any way to find someone who can help. I have gotten the alimony lowered but still neck deep in debt from the divorce.

Steve”

The Answer:

Dear Steve,

There is only on real option here, bankruptcy. Sure, I could tell you that if you got a second job and struggled to make some payments that you’d be able to enter a debt management program to start making payments, but I think that would not be realistic.

If you struggle to make four months of payments and then get laid off again, then what, you’re right back where you started. Besides, you’ll have a big bill due from the repo, the old debt you are bringing forward from the divorce is dragging you down, and now you’ve got new obligations.

I think you really need to talk to a bankruptcy attorney, learn what bankruptcy will mean for you, and move forward. Click here to file bankruptcy.

I wish I had some crafty and magical plan for you but really, it looks fairly dire and in need of drastic action to make it different/better.

Big Hug!

@GetOutOfDebtGuy

What Should I Do to Get my Credit Score Up From 400? – TLT

Steve Rhode — Mon, 04 Jan 2010 14:59:16 +0000

From How to Get Out of Debt

TLT

“Dear Steve,

Great job make about $60,000/yr. 2 children. Single parent. Between my rent/utilities $1200/month, Car and Insurance $600/month, money I owe to grandmother $700/month and daily living expenses.

My kids are athletic I pay for sports, all equipment needed. I pay for all aspect of our healthcare. I have a ton of bills. Public records, judgements, defaulted student loan, old-closed credit card bills coming to me for settlement offers, old cell phone bills in collections, medical bills, a repossession that I was cosigner to in 2005, creditors calling me everyday about 10 times per day.

I have no extra money once I pay my immediate bills and when I do have some that could go towards one of these problems, I don’t know who to pay first. Seems like it won’t end even if I pay a little to one company when I can so I find myself not paying.

I am so overwhelmed with collections that when people tell me to pay a little to each it make me crazy. The companies don’t want a little, they want large lump sums of $200 or more. I don’t have it to give.

I desperately want to fix my situation, but how. I also have a hectic job that starts at 8am and ends at 5pm. I cannot find time to call these creditors and haggle with them especially when I cannot financially do what they need me to do.

I am 35 years old. I rent a 2bdrmm townhouse, but want a house of my own in the near future. Because of my income I’m afraid that I may have to pay for my child’s college education myself, he’s 13 years old.

Do I apply for bankruptcy? Where do I start because in reality, once my immediate bills are paid I have little left over. No support from children’s father he never pays child support to the court.

What are my steps in getting my credit score from the 400 to 500′s that I’m in to at least a 650. I was at a 650 about 4 years ago and then my life turned upside down. I had another child, no support from children’s father, moved out on my own and aside from being blessed with good health of my children everything else is gong down hill.

TLT”

The Answer:

Dear TLT,

I was hoping that you had some extra money available for debt repayment but once I saw that you didn’t and that part of your debt is for an old repo, well I’m afraid the die has been cast already for you.

You can go and try other options but I honestly think this is a hole you are not going to be able to dig yourself out of without bankruptcy. Contact a local bankruptcy attorney and make an appointment for a free bankruptcy consultation.

You should also pursue the children’s father through the court for child support. Not for yourself, but for the children. It is actually the money legally awarded to care for them and the kids need for you to fight for it for them.

Going bankrupt will help to improve your credit score. I know, that sounds crazy. Your score is horrible right now simply because of all these open collection accounts. Bankruptcy will end all of those. Once you go bankrupt you can start to rebuild your credit again with a secured credit card. A secured card will let you safely start to build new and good credit if you use it responsibly.

Big Hug!

@GetOutOfDebtGuy

Can The Creditors Come After My Car? – David

Steve Rhode — Sat, 26 Dec 2009 17:41:07 +0000

From How to Get Out of Debt

“Dear Steve,

I live in CA $60K unsecured debt, 10K in student loans, 25K owed on car. student loans and car are paid up to date, unsecured debt hasnt received a payment in about a year and a half.

I am about to let my car go because I cant afford the payment anymore and plan to buy a car outright with cash. Can any of the creditors come after my car if I own it outright or would I be safe?

David”

The Answer:

Dear David,

As long as you are just buying some beater car to get around, nobody wants your crappy beater car.

But the real issue here is that you need to step up and do something about this situation. You need to intervene. It’s not going to get better all by itself. The minute you let that car go you are going to get slammed with a big crazy bill for the difference between what that car will sell for at auction and your current loan balance.

Good job though on staying current with the student loans. You need to keep those current.

Frankly, I think once you let the car go and you get the bill from the auto lender, you need to go talk to a bankruptcy attorney. Euthanize this old debt and stop it from festering so you can move forward in your life. This holding pattern of debt is not a place for you to live.

Big Hug!

@GetOutOfDebtGuy

I Don’t Want The Car In My Driveway, I Can’t Afford, to be Repossessed or Effect My Credit. – Brandy

Steve Rhode — Fri, 18 Dec 2009 17:53:09 +0000

From How to Get Out of Debt

Brandy

“Dear Steve,

I signed a car loan for an ex, now he is not paying…What do I do next?

In November 2008 my boyfriend of 3 years and I went to a auto dealer. We traded in both are vehicles for a 2005 Jeep Liberty (for him) and a 2004 Nissan Murano (for me). He was not able to get an auto loan but I was.

Both vehicles were put into my name only. Now 6 months later, I get home from work one day and the Jeep is sitting in my driveway along with the keys. He left no explanation as to why he did this.

NOW, I am stuck paying it. Both vehicles together were around $40,00. So, I am suck paying over $800.00 a month in car payments. I have no idea how I was given loans for that much. I make less than 12.00 an hour. I am a single Mom from a previous marriage and I haven’t received any child support in a year.

I can’t afford to ruin my credit by having it repossesed.

Brandy”

The Answer:

Dear Brandy,

It is only a matter of time before the Jeep will be repossessed. It won’t be long now, on your current income, that you will most likely fall behind on the payments.

Co-signing is a suckers game. The co-signer usually thinks they are doing a good thing, but they really are not. At least not for themselves. When a lender requires a co-signer it is because the primary applicant has such bad credit that they want someone with better credit to go after if the crappy credit person does not pay.

But the bad stuff hasn’t even happened yet. You see once the Jeep is snatched by the repo guys it will be sold at a public auction. The difference between the current loan amount and the auction sale price will be your responsibility to repay. The bill will be huge. I would guess the bill will be in the $16,000 range plus some fees.

I’m not telling you all of this to scare you, but to alert you of what will happen. You can better deal with it if you are informed about what is coming.

Now once you get the bill, you won’t be able to afford it. Your financial life will swirl down the toilet and it will create great anger and stress for you. The best way to avoid all of that is to wait for the vehicle to be repoed and the big bill to land in your lap. At that point you will strongly need to consider going bankrupt to end that financial liability.

This problem is created by your boyfriend dumping the car in your driveway but it all began by a lender approving you for credit that you had no business being approved for. They put you in a noose and your boyfriend kicked the chair out from under your feet.

Please, never co-sign for anyone else and warn all your friends about the perils of co-signing as well.

Big Hug!

@GetOutOfDebtGuy

I Owe a Deficiency From My Repossessed Vehicle. – Denise

Steve Rhode — Wed, 16 Dec 2009 20:14:15 +0000

From How to Get Out of Debt

“Dear Steve,

I owe a deficiency of $15,000 for a repossessed vehicle that my credit union auctioned. And am thinking about just adding all my other debt (medical bills) to the bankruptcy. The collectors for my medical bills haven’t contacted me in a while, and I want to know how much I owe the collectors. I don’t even know who the collectors are. :/..(I’m from California)…I’m currently unemployed. I haven’t received a credit report since I had leased my now-repossessed car (2 years) ago, and I’m ridiculously broke.

Denise”

The Answer:

Dear Denise,

Yes, you can just add the repossession deficiency into the bankruptcy. I would suggest you ask your bankruptcy attorney if they can run your credit report for you. That way they will have all the information on hand to file.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Boilermaker Seasonal Financial Despair and In Super Hot Water – Heidi

Mike Killian — Sun, 13 Dec 2009 15:44:47 +0000

From How to Get Out of Debt

“Dear Steve,

My husband is a boilermaker which is a feast for famine type of job. By the time we get caught up on basic utilities and rent and car payments, his job ends and if we have been able to save anything its used within the first month to survive we have 4 children and the grocery bill by it self is more than our house payment was before we were foreclosed on a year and a half ago. I used

to work and made great money but the company I worked for closed its doors in our area. Now I can not get a job to earn enought to pay for childcare and the state considers his employment when working to make to much for assistance in childcare. So I am a stay at home mom. We

have about 35000. in debt and another 15000. in debt to family members. His total income was 58000. last year. The IRS has been keeping our refund since 2003 ‘s for back taxes and we now owe the state of WV aprox. 10000. in back taxes. When he is working we can afford to pay for bankrupticy and we qualify for a pay back schedule but when he is laid off we qualify for a bankruptcy but can’t afford to pay for it. We have had a foreclosure and 2 repos in the last 2 years. If we set up a repay schedule we can not afford the payments when he is laid off. No matter what we do there is no out.

What can you recomend or advise us to do to get out for this situation. I have went back to school but now we are going to need to pay back my student loans in 3 years.

Heidi”

I asked my friend Mike Killian to answer your question for you. I wanted to make sure you got an answer as quickly as possible as I’m a bit backed up at the moment. I’ll be watching the comments on this question and be around to help if you need me.

Big Hug!

@GetOutOfDebtGuy

Hi Hiedi,

I am going to answer your question in two fashions. The first answers your question from a professional standpoint and is the actual solution. I will then follow up with the options you have available that is more in tune with what I think you are seeking… but not the answer to your question.

The real answer to your dilemma is a very solid budget. I know you are in a financial straight jacket right now but I guarantee once you are out of the mess you are in, you will be right back into it without an exceptional budget. Steve Rhode offered an article on this subject called Suggestions for Budgeting Tools. Additionally I usually don’t offer my own web sites in these responses but this may be an exception. You might check out What Constitutes a Good Budget?

In your budgeting efforts two things will be essential. You must capture ALL expenses and you must plan annually and divide by 12 or quarterly and divide by 3. You must insure you have a contingency fund to make up for the lean times and you must hold back spending in the good periods to avoid famine at other times.

Having said all that, now you face the current moment. It is imperative to take an action. Even the wrong action can be better than no action as your problem will not go away. In fact, it will simply worsen.

The first thing is contacting the creditor and trying to lower interest or repayment structure. This may be a mute action but who knows. It might work. The second option is working through a debt counselor to try to get that interest down and working out a debt management repayment program. Please check with Better Business Bureau and anyone familiar with a local office before making any commitment to them. Simply locate a debt counselor in the yellow pages of a nearby major metropolitan area. The third option is debt negotiation. With this option you or a professional debt negotiator offer less than what you owe…. Say 50%. That sounds good on the surface but has some drawbacks. Debt negotiation usually requires a lump sum payment and completely destroys your credit. Additionally any debt forgiven above $600 will be taxable by the IRS as added income.

The final solution is bankruptcy and I realize you have talked about it but have you actually spoken to a bankruptcy attorney. The initial consultation is usually free and at least then you would be armed with proper knowledge of the facts so that you can make a decision. Your taxes will not be forgiven but you may find a great deal of breathing space from which to start anew.

The final step is to decide on an action and when you do, embrace that action at warp speed. This means both of you. Decide and act! In the immortal words of Nike Shoes, “Just do it!”

Sincerely,

Mike

If you have a credit or debt question you’d like to ask just use the online form. We are happy to help you totally for free.

Repossession: Why it happens, what you can do, and your rights before, during and after repossession

Steve Rhode — Fri, 04 Dec 2009 21:02:13 +0000

From How to Get Out of Debt

Losing Your Vehicle By Repossession

If you fail to make payments on a car loan, or anticipate a problem paying in the near future, you should be familiar with the process of repossession and what rights you may have. This publication will cover your rights before and after repossession, starting with the security agreement you signed when you bought the car and ending with your rights after a creditor sale of your car.

Specifically, this publication will answer the following:

How does the creditor have a security interest in your car and what does this mean?
How can you default on a loan?
When can you reinstate the contract or redeem the car?
Do you have rights to be notified before repossession?
How can you stop self-help repossession?
What are your rights before and after the sale of your vehicle?

It is important to know that every state has a different mix of laws on this subject and the rights discussed in this publication may or may not be available in your particular state. You must check with an attorney in your state to see which of these rights is available to you.

Did You Sign a Valid Written Security Agreement?

Did You Default on the Loan?

Before a lender can repossess your car, you must default on the loan. The usual way that a consumer defaults on a loan is by failing to make a monthly installment payment. (If you are in this situation or close to it, see the publication called “When You Can’t Make Your Car Payments.”) But there are other ways that you can default, and these are spelled out in the security agreement that you signed when you bought the car. Some examples include: failing to purchase insurance, losing or destroying the car, selling the car or moving the car to another location without the lender’s permission. If you don’t understand why or how you defaulted, you should look at your agreement to see what constitutes a default.

Did the Loan Accelerate?

Did You Get Notice of Acceleration and the Right to Cure?

Under the terms of your agreement, the creditor may not have to tell you that your loan is accelerating. Most agreements have a provision waiving the consumer’s right to notice of acceleration.

Even if you waived notice of acceleration in the agreement, you still may get some help from your state laws. Some state laws – usually called “right to cure” laws – require notice before acceleration, and these laws override the waiver provisions of your agreement. Under a right to cure law, the creditor must allow you to pay back payments plus delinquent charges and reinstate the loan within a particular amount of time before the note will accelerate. This means that your creditor would have to give you notice before acceleration AND give you the chance to correct the situation.

State laws may further restrict grounds for default and acceleration and may specify the number of times that you may have the right to cure.

Was the Creditor’s Self-Help Repossession Lawful?

Express consent. Some states do not permit repossession without the consumer’s express consent (usually in the signed agreement). You consent if you specifically knew of the creditor’s right to repossession and specifically knew that the creditor could repossess your car without having to go to court first.
Military personnel or dependents. If you are in the military or are a dependent, you are protected by the federal Soldiers’ and Sailors’ Civil Relief Act. This law, however, provides only temporary and partial relief. If you bought a car before you entered the military service and default on your car payment while in the military, your creditor must take you to court to repossess the car. However, your creditor can still use self-help repossession to repossess a car that you bought while you were in the military. But you still may be protected in another way: standard military policy requires that any repossessor entering a base must be accompanied by military police. If you are present during a self-help repossession, a court may find that the presence of a military official forced you to consent to repossession, which is wrongful repossession.
Native Americans. Native Americans may be protected if tribal law prohibits self-help repossession.

Did the Creditor Breach the Peace During Self-Help Repossession?

A creditor cannot breach the peace when he repossesses a car. Breaching the peace includes many situations, such as:

Touching or pushing you.
Damaging your property during repossession.
Tricking or lying to you, in some states. A few courts have held that laws cannot encourage lying and trickery to repossess collateral. Courts are divided as to whether a repossessor can trick you to take your car. In one instance, a creditor breached the peace when he pulled the debtor’s car to the side of the road, rode back with the debtor to the dealership and seized the car while the debtor was inside. In another case, a creditor breached the peace when he lied and said he was a government official. However, some courts have found that there was no wrongful repossession when the creditor lied and said he was taking the car for repairs.
Threatening you if you feel immediate fear. For example, a creditor’s threat to seize your car at some future time does not put you in immediate fear, so there is no breach of peace.
Ignoring your objections. If you, your relative or your friend objects to the repossession but the creditor still repossesses the car, he breaches the peace. You should object at the time the creditor takes the car. If you object after the creditor took the car, it is too late. If a sheriff or other government official is present, don’t resist his seizure of the car, but verify the official’s authenticity.
Entering a closed garage. Even without physically breaking in, a creditor breaches the peace when he enters a closed garage. Generally, there is no breach of peace if the creditor takes the vehicle from the public street, a parking lot, a private driveway, an open garage or a carport. A creditor’s trespass can be a breach if there is a potential for immediate violence.
Police presence. If the creditor brings a police officer not through a paper of the court and the presence of the officer so intimidates the debtor as to have “forced” him to consent to repossession, the creditor breached the peace.

If your creditor refuses, you can sue the creditor for the property’s value, for your loss of use or for any damages to the property while it was in the creditor’s custody.

Did the Creditor Properly Dispose of the Car After Repossession?

After repossession, there are six possible ways that the creditor can dispose of your car.

Reinstatement. After repossession, your state law may give you the right to reinstate the contract by paying the amount past due. If this is the case, the creditor must give you notice of your right to reinstate and the amount due. You have a particular time period, usually 15 days following repossession, to reinstate the contract. You may only get one opportunity to reinstate a contract. If the creditor does not comply with reinstatement procedures, he may be barred from later obtaining a deficiency judgment and may even owe you money.
Redemption. Every state gives you a chance to redeem your car by paying off the entire loan plus reasonable repossession and storage charges at any time before your creditor sells or otherwise disposes of the car, even if you had voluntarily surrendered the car. A written waiver of the right to redeem is ineffective unless you signed a written waiver AFTER you defaulted on the loan. Unfortunately, this right to redeem does not help most consumers who have their cars repossessed due to money troubles and cannot come up with a large lump sum of money. Before you redeem, you should know the loan amount, repossession fees, costs associated with the sale, and reasonable attorneys’ fees and legal expenses. If the debt has accelerated, the creditor is not entitled to unearned interest or insurance payments that are not owed because the note has been paid off early. Remember: you may be better off buying your car at the repossession sale than redeeming. The sale price at a creditor sale may be less than the amount you owe. However, you will still be liable for any amount of your loan obligation and repossession costs that are greater than the sale price of the car (the deficiency).
Strict Foreclosure. Your creditor could keep your car in satisfaction of your obligation, which is called “strict foreclosure.” If your creditor elects strict foreclosure, you would not owe the creditor any payments, although your creditor can keep all prior amounts that you paid. If the creditor intends to elect strict foreclosure, he must tell you in writing. You can object to strict foreclosure in writing within a certain amount of time, depending on your state, usually within 21 days of the notice. You should object to strict foreclosure if you believe that you or the creditor could get a sale price that would cover the remaining amount that you owe plus any repossession, reconditioning and sale costs.
If your creditor has repossessed your car but has not disposed of it in any way, it may no longer be worthwhile to sell the car. You can argue that the creditor, in effect, elected strict foreclosure because his holding onto your car for so long made a subsequent sale commercially unreasonable. This is called “constructive strict foreclosure.” If you successfully argue constructive strict foreclosure, your creditor would not have a claim to any deficiency. Even if you live in a state that does not have laws on constructive strict foreclosure, many courts will treat the creditor’s repossession as extinguishing the debt for the value of the car if they do not dispose of the car within a reasonable period. (See “delay of sale” under the discussion of Creditor Sale).

If you have paid at least 60 percent toward the car, your creditor cannot elect strict foreclosure.
Judicial Sale. A creditor could dispose of your car though judicial sale. A creditor will rarely do this since it adds extra court costs and a creditor can generally sell the car without having to go to court first.
Consumer Sale. Your creditor may allow you to sell the car. You should take advantage of this if you believe that you can get a better price on your own. In fact, it may be unreasonable for a creditor NOT to let you sell the car if you can get a much higher price than your creditor.
Creditor Sale. The final way that a creditor can dispose of your car is by selling the car at a public or private sale. During the sale of your car, the creditor must follow certain rules. If the creditor does not, you can sue the creditor to stop the sale and to recover money damages. Two of the most important rules are: (1) the creditor must give you notice of the sale, and (2) the sale must be “commercially reasonable.” Both of these rules are discussed in detail below.

Did You Get Notice of the Creditor’s Sale?

Was the Creditor’s Sale Commercially Reasonable?

Creditor use of car. A creditor’s use of the car before sale could be commercially unreasonable. When the car is in the creditor’s custody, the creditor has a duty to use reasonable care. If the car is destroyed while in the creditor’s possession, the creditor may no longer be entitled to any deficiency. In general, the creditor cannot drive the car unless it is to preserve the car’s value – never for personal reasons.
Creditor reconditioning the car. It may be commercially unreasonable for a creditor to sell the car “as-is” if preparing the car in some minimal way could significantly increase its value. The creditor may have to “recondition” the car, including polishing, cleaning, tune-ups and paint touch-ups. At the same time, you should make sure the creditor does not put too much work into reconditioning the car, because you will end up paying for all reasonable expenses of car preparation for sale. The amount of reconditioning should be proportionate to the value of the car or must result in a significant increase in the sale price.
Creditor delay of sale. The creditor cannot unreasonably delay the sale of the car. If the creditor holds onto a car for too long, the creditor may be barred from collecting any deficiency and may have to accept the car as settlement for the rest of the amount due on the loan. (See “strict foreclosure” under Creditor Disposition). On the other hand, a sale that is too hasty could be commercially unreasonable if it results in inadequate advertising or in a failure to produce a sufficient number of bidders. If the debtor already paid 60 percent or more of the loan, the sale must be within 90 days. To determine whether a delay is commercially reasonable, check how much the car has depreciated during the delay, and consider the storage costs and other seasonal and regional variations.
Creditor choice between public and private sale. The choice between a public and private sale must be commercially reasonable and must maximize sale proceeds. However, a low sale price by itself is probably not enough to prove that a sale was commercially unreasonable. You should check wholesale pricing guides, like the publication put out by the National Automobile Dealers Association, to determine whether a sale price was commercially reasonable.
The creditor must make the car available for inspection before a public auction. If you see that a creditor’s preparation for sale is clearly inadequate or if the creditor appears to be selling to itself at a low price, you can try to stop the sale. At a public sale, you can bid for your car. You can also offer to purchase your car at a private sale.

Is There Any Deficiency After Creditor Sale?

If you owe a deficiency, you should recalculate the deficiency amount to make sure it is correct. Make sure the following is accurate:

The remainder due on the loan before adjustments. Obtain the original credit documents, recalculate the total amount due and make sure the credit rates are not higher than your state limits.
Unearned interest rebates. The total payment of a pre-computed loan includes interest payments over the full loan term. When a creditor accelerates the loan payments, the creditor is seeking payment earlier than scheduled so the amount of interest that you owe decreases. The creditor should rebate this unearned interest to you, and the rebate should be computed based on a formula specified in the loan agreement or based on state law, whichever is more favorable to you, as of the date of acceleration.
Interest and penalties after acceleration. After rebating the unearned interest, your state’s laws or the credit agreement may authorize the creditor to charge interest on the amount due from the date of acceleration until you repay this amount. It depends on state law and the contract, but usually late payment charges will not be permitted after the time of acceleration or at the time a deficiency judgment is rendered. A creditor cannot charge both late-payment and extra-interest charges for the same period.
Prepaid insurance premiums. You should cancel any prepaid insurance and get a rebate. Also, you should make sure that the creditor does not charge for reconditioning and repairing a car if it is covered by the car’s service contract or extended warranty.
Value of car. Make sure you are credited the sale price of the car at retail, not the estimated value.
Expenses from repossession and sale. All expenses must be reasonable, including all repossession, storage, repair, reconditioning and advertising expenses. The creditor cannot charge you more than the amount the creditor was actually charged. Expenses for sale should be the same as for the creditor’s non-repossessed cars. Any attorneys’ fees and legal expenses must be reasonable and are governed by the credit agreement and by state law.

@GetOutOfDebtGuy

My Car Was Picked Up By The Repo Man. What Happens Next? – Michelle

Steve Rhode — Wed, 23 Sep 2009 18:40:03 +0000

From How to Get Out of Debt

Michelle

“Dear Steve,

I was laid off last Fall, and have been unable to find work (not even part-time). I fell behind in my car payments and am no longer able to afford the car. The finance company repo’d the car without notice, and will not talk to me about what I am supposed to do next. Am I just supposed to sit here and wait for a lawsuit to be served???

What usually happens after your car is repo’d? Can I be sued even though I don’t have any income? What recourse do I have, if any?

Michelle”

The Answer:

Dear Michelle,

Recourse huh, not a whole lot. Without income to bring your loan current or payoff the loan I’d say this situation is going to result in the following.

Your car will be stored until the public action. You will be billed for that storage and the repo itself.
At the public auction your car will sell for less than the value of the loan.
The lender will send you a huge bill for the difference between the balance of the loan plus repo and storage fees and what the car sold for at auction.
You probably won’t be able to pay that big bill.
Once you get employed again, and depending on the size of the bill and potential subsequent lawsuit for the bill, you’ll probably go bankrupt.

Was this a car that you financed from the local lot you bought it from? Were you making weekly payments to a local car sales place?

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

I’m Afraid We Are Going to Lose Our Vehicles to Repo? – James

Steve Rhode — Tue, 15 Sep 2009 12:17:08 +0000

From How to Get Out of Debt

“Dear Steve,

Hi, I am currently out of work and my wife will start a travel position October 5th. We are behind on our car and truck payments 1 month. We just modified our home and got our payment lowered for 5 years. We will be able to catch up on our payments within 2 months, but I’m afraid we are going to lose our vehicles before then. We have already gotten a deferment on my truck and van, so that won’t work. don’t really know what to do. Just don’t want to lose our vehicles, what do you suggest.

James”

The Answer:

Dear James,

I had the following questions that I’d like for you to answer before I can answer your question. Please post your answers in the comments section of your question. I’m looking forward to helping you for free.

How many vehicles do you have? Van, truck, car?
What are the monthly payments for each?
How much can you afford to pay in total towards vehicle payments each month currently?
Which vehicles do you absolutely need?

If any reader wants to offer advice in the comments section please feel free to participate.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

I Want to Repossess My Brothers Car. – Nicole

Steve Rhode — Wed, 19 Aug 2009 18:46:06 +0000

From How to Get Out of Debt

Nicole

“Dear Steve,

My brother needed help with getting a car. So me being the nice sister I am agreed to help, not knowing he was not going to keep any of his jobs figuring a 21 year old does not have to worry about life must be. I gave him numerous chances to redeem himself. Finally I told him I am going to take the car. Again a 21 year old throwing a fit and making everyone feel bad that I am taking the car was just amazing. I am pretty sure he wont hand over the keys without a struggle.

If the car loan is in my name, the insurance, title, plates, and registration are in my name can I bring the cops with me to make sure he gives me the car when I drive 4 hours to go and get it?

Nicole”

The Answer:

Dear Nicole,

I’m not surprised by much these days and I would expect your brother to give you a fight about handing it back. But after all, it is technically your car and really not his to hand back since you own it.

I’d suggest that you call the local police department where he lives and explain the situation to them. I’m sure they’d coordinate an officer going with you to avoid a confrontation when you see your brother to pickup the car.

It’s a sucky situation but it sounds like you are doing what you need to do to protect yourself from an irresponsible borrower, who just happens to be your brother.

Big Hug!

@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

Jerry Wants to Know How to Repay Debts He Can’t Afford

Steve Rhode — Tue, 18 Nov 2008 22:33:27 +0000

From How to Get Out of Debt

“Dear Steve,

I have a time deposit at the bank and borrowed 80% of it using the deposit as collateral. I already skipped 3 payments even for the interest alone.

My car is also mortgaged at another lending firm and I already skipped 2 monthly payment for my amortization. I have a small business but the income I get is just good for food.

Based on my situation above what can you advise or a remedy to do on my part. Thanks

Jerry”

The Answer:

Dear Jerry,

I suppose this is a variation of the good news – bad news situation. In your case, since you deposited the money with a bank and then took a loan using the deposit as collateral, the bank can take the money from your deposit to pay off the bank loan.

It might actually make sense to ask them to do that since it does not sound like there is a reasonable expectation that you will be able to get caught up on that loan again in this current economic climate.

The money that is leftover from your deposit, after paying off the loan, could be used to help bring the car loan current.

Of course if the car is not affordable at all with your current income, that is a different matter and bringing the car loan current may just give you a few more months with the car before it is repossessed if you fall far behind again.

I hope that helps.

Steve

The Answer:

Catherine Asks If There Is Hope Or Help For Debt

Steve Rhode — Tue, 02 Sep 2008 17:56:25 +0000

From How to Get Out of Debt

Catherine writes in: “My husband and I are behind on a few of our loans and one is a vehicle payment and the other if a flexline loan( pretty much a credit card) we have talked about bankrupcy but would like to avoid that. Are there any companies out there that offer help for these things.”

Catherine,

Thank you for writing in using the form below to contact me.

What concerns me most about your question is that you are behind on your vehicle payment. Generally mortgage payments and vehicle payments are the first to be paid because people realize that if they don’t make the mortgage payment they can get booted out and if they don’t make the vehicle payment then the car can get snatched in the middle of the night. Hello Mr. Repo man.

A vehicle is often critical to be able to get to work and make money. It’s not optional.

Even if you were to enter a debt management plan to avoid bankruptcy, from my years of experience I think it would be doubtful that you’d be able to make the payments necessary to get out of debt.

In a debt management plan your vehicle payment does not go down. If anything, it goes up. In order to hold onto the collateral, in this case your vehicle, you’d need to get back on track with your regular, full and contractual payment plus add some to pay off the past due balance.

Again, from experience this is often a very difficult hole to crawl out of. After all, if you could afford to make the regular vehicle payment, you’d be doing that now.

The only exception to this advice would be if you were suddenly going to make more income each month or you had a temporary reduction in income that has now passed.

I don’t think you should avoid bankruptcy just because you might not like it. You should get well informed about all of your options and you should meet with a bankruptcy attorney and discuss how bankruptcy might impact you. You might just find that it is a better solution for your situation, but you won’t know until you ask and investigate it.

If you meet with the bankruptcy attorney and decide that bankruptcy is not for you then you have a couple of options. One is a debt management plan and the other would be to contact your creditors yourself to attempt to negotiate a repayment plan that is reasonable and affordable for your every day life.

Big Hug!

@GetOutOfDebtGuy

How to Get Out of Debt With the Get Out of Debt Guy » repo

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