What Happens When I Hand Back My Vehicle We Can’t Afford?


Dear Steve,

I used to work for the Department of Defense on a military base. I worked for several years. I had to stop about six months ago. My husband is a retired disabled veteran.

Now we have too many payments and one paycheck from his retirement and social security. We decided to voluntarily turn one of our vehicles in to eliminate that payment and be able to help our son with the payment of a studio on campus so he won’t have to drive every day anymore.

What happens when we turn in a car because we can not afford paying for it?



Dear Daisy,

When you turn the vehicle back in they will sell at a wholesale auction of for a lesser amount than you owe. You will then owe the difference between the current loan value and what little they sell the vehicle for. You may then be sued for the balance owed.

You should either negotiate with the lender to turn the vehicle in without owing additional money, sell the vehicle for what you owe, or consider bankruptcy to turn the vehicle back in and terminate the remaining balance owed if the other options do not work.

It will also appear as a repossession on your credit report if you turn it in or they come and get it. Turning it on voluntarily can save a bit in repo costs but that will be peanuts compared to the bigger bill you will probably get.


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Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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