I’m a Disabled Air Force Veteran and Can’t Afford My Car. – Deborah

“Dear Mitch,

Used car. I started out July 2007 paying over 30% interest. Car is Mazda RX-8, 2004. I signed a contract for 7 years with some bank to pay $440.00 a month for 7 years. Now car payment is in collections since April or May of 2011. I’m retired disabled Air Force Veteran. I’m living on limited income now. When I signed for the vehicle, I was retired but employed. I am now considered unemployable, on Section 8 & limited income. The car is unoperable & the car was hit & I did not report the damage to insurance at the time. I no longer have insurance on car. Car has been sitting since March 2001. It will cost me over $5000.00 to fix. I owe the collection agency close to $15,000. I want to keep the car & fix it.

What can I do to keep the car? I feel I’ve paid way to much for this car already. Would I be able to SIF (Settlement In Full)? Or should I file bankruptcy again. Last bankruptcy discharge papers was April 2001.

Deborah”

Dear Deborah,

Why do you want to keep vehicle that doesn’t work, is almost 8 years old, that will cost over $5,000 to fix and that you owe over $15,000 to pay off? You cannot send them a check marked paid in full in the hopes of getting the lien resolved. You can contact the lender to see if they are willing to settle for much less, but I doubt you will be able to get the debt down low enough. Chapter 13 bankruptcy will do that, but based on your situation, it doesn’t sound like you have the money left to fund a plan AND I do not recommend Chapter 13 just to save a car.

There will be other cars. The money that you spent on it is gone. Do not make it worse by throwing more money at it.

Consult with a bankruptcy attorney to find out if any of your property or income can be seized by a collections suit (this stage happens after a judgment is granted). If not, let the car go and don’t worry about it. If you are collection proof, you have nothing to gain from a bankruptcy at this point. Sometimes doing nothing is the right option. Just do it after guidance and not as a way of ignoring the problem.

Mitchell Goldstein is an attorney licensed in Virginia. His practice focus is consumer bankruptcy, mortgage and debt defense and technology issues. He is a proud member of the National Association of Consumer Bankruptcy Attorneys (NACBA) and National Association of Consumer Attorneys (NACA). His goal is to educate people with solid advice and give guidance to consumers to help them made decisions that impact their financial well-being.

Legal Disclaimer: This is for educational purposes only. It is not to be relied upon as legal advice. It also does not create an attorney-client relationship. No such relationship is formed with attorney without a written agreement.