Dealing With Debt? Understanding your options is the first step. See how all your debt relief options compare — including ones most sites won’t tell you about. The Find Your Path quiz gives a recommendation based on your actual numbers, and the Scam-O-Meter checks any company’s complaint history before you sign. Federal Reserve research shows bankruptcy filers recover faster than those who don’t file.
Free Tool — Contract Decoder: Have a contract from a debt relief company? The free Contract Decoder analyzes it for red flags, hidden fees, and problematic terms — before you sign anything. Decode My Contract →
Key Takeaways
- When side income disappears, your lifestyle no longer fits your budget — the vehicle payment is a symptom, not the only problem.
- Contacting your lender to renegotiate the note is always worth trying before making bigger moves.
- Refinancing a car loan lowers the monthly payment but extends the term, meaning you pay significantly more over the life of the loan.
- Chapter 13 bankruptcy can legally 'cram down' a vehicle loan to the car's current value — you keep the car with lower payments.
- Bankruptcy doesn't mean losing your vehicle — it can actually be a tool to protect it while reducing what you owe.
- Police officers frequently struggle with debt, especially when overtime and side jobs dry up unexpectedly.
- The only real legal protection consumers have when dealing with creditors is through the bankruptcy system.
Full Transcript
Click to expand transcript
Don’t be embarrassed and trust me, don’t be ashamed. Everything you say to me, baby, is confidential. I know this is really intimate stuff, but only. Let’s talk about debt. Coming to you again with more help is your get out of debt guy. You’re a man with the answers to solve all your financial worries. Your host and debt expert, Steve Rhode. I’m back again answering questions this time from James. James is a police officer on the East Coast and he’s got a real sticky situation with his car. And let’s see if we can’t help him find a solution. James, what’s your question? Yes, Steve. My name is James. And I’m calling in reference to a vehicle note that is extremely high for me. I’ll give you some background on myself. I am a police officer on the East Coast and I’ve always worked three to three off-duty jobs where my cash flow was extremely high. I went out on the East Surgery after I bought a $60,000 vehicle. And while I, nine months later after being out of work, the employment was no longer there. Thus my debt ratio crashed tremendously. What would you advise us to hold about four to five years on this vehicle left? I’m wondering how can you help me with some info to either refinance the truck because my credit has taken a hit because of my medical situation. Yes, I do need help. Thank you very much. Your stay. Got it. Well, James, thank you for contacting me. I can hear it in your voice. Also, the police radio traffic in the background was a nice background sound too. You know, the situation you’re faced with is that your current lifestyle does not fit within your income anymore. Your lifestyle was based upon income, those side jobs, those two or three jobs that you had. You just don’t have anymore. They’re not coming in. They’re not making the money. So somehow way we have to figure out how to deal with this $60,000 vehicle that your payments left on. And there are a few ways. One is to contact the lender and see if they’ll renegotiate the note and maybe give you a payment that you can afford. The second way would be to try to refinance the used vehicle. And it would lower the payment, but it would extend the loan out further. You could do it up to six or seven years now. If you do that, like I said, the payment will be lower, but the overall amount that you will pay will be much higher than if you stayed on your current payments schedule. The reason the payment is lower is because it’s extended out longer. So that would give you some breathing room and a couple of places that you might want to check are lending club dot com lending club dot com and elone dot com E L O A N dot com. They used to do auto refinancing. And in fact, in the past, I used them to refinance a vehicle I had. And it was really a very simple process. And I later used them to purchase a new vehicle. And again, it was so easy to do. So I’d look at those two resources because the last resource here that we have to deal with is I don’t think that the vehicle here is the only issue. I think that because you lost that side income that you probably have growing bills and it’s made it harder to get by just day to day and not just make that loan payment. So in that case, really your options are significantly the only legal tool that you have, the only legal protection you have as a consumer when dealing with creditors is the protection from bankruptcy. Now bankruptcy doesn’t mean that you would lose your vehicle. In fact, if you went into a chapter 13 bankruptcy, the amount of the loan on the vehicle could be legally crammed down, legally reduced to the current value of the vehicle you’d be able to keep it. You would just be making new lower payments. So before you jump into any sort of loan, I have just asked you to consider talking to a local bankruptcy attorney about what bankruptcy may offer you and the protections it may give you. Are you the first police officer that would have ever gone bankrupt? Absolutely not. Over the years, I’ve worked with so many police officers. And in fact, I think I have a pretty good understanding of what it’s like the pressures involved and you know, police officers notoriously struggle to pay the bills. They have long schedules, they’re stressed, they just don’t want to deal with it when they get home, etc, etc. And in fact, I have a special affinity in my heart for police officers. I worked my way through college as a police dispatcher. I hope that helps. And if you have any further questions, just come on back to the GetOutOfDebt.org website. I’m here for you James. Bye. Subscribe to the show feed and what’s that Steve? Remember Twitter. Oh yes, follow Steve on Twitter at GetOutOfDebtGuy.
Frequently Asked Questions
Can I keep my car if I file bankruptcy?
Yes. In a Chapter 13 bankruptcy, the loan amount can be legally reduced (crammed down) to the current value of the vehicle, and you keep the car with lower payments. Chapter 7 also has vehicle exemptions in most states.
Every weekday I read the enforcement actions, filings and fine print the outlets skip, and turn them into the one or two moves that actually improve your position — a rate worth moving for, a fee you can refuse, a deadline to beat before it costs you.
I write Your Money Actually most weekdays — actionable money information you will not find anywhere else, and the small decisions that compound. It is free, I sell nothing, and I take no money from any company I write about.
What should I do if I can't afford my car payment after losing income?
First, contact your lender to ask about renegotiating the note. Second, look into refinancing to lower the monthly payment (though you'll pay more over time). Third, consult a bankruptcy attorney — Chapter 13 can legally reduce the loan to the car's actual value.
Do police officers really file bankruptcy?
Yes, frequently. Steve Rhode has worked with many police officers over the years. The job involves long hours, stress, and often reliance on overtime or off-duty work that can disappear suddenly due to injury or policy changes.
What is a 'cram down' in Chapter 13 bankruptcy?
A cram down reduces a secured debt like a car loan to the current fair market value of the collateral. If you owe $40,000 on a car worth $25,000, the court can reduce the secured claim to $25,000 with a new payment schedule.
Should I refinance my car to get a lower payment?
Refinancing can help in the short term by lowering monthly payments, but extending the loan to 6-7 years means you pay significantly more in total interest. It's worth exploring, but consider all options including bankruptcy before committing.
