repo, debt consolidation or bankruptcy

Date: Tue, 11/14/2006 - 05:07

Submitted by anonymous
on Tue, 11/14/2006 - 05:07

Posts: 202330 Credits: [Donate]

Total Replies: 2

My 20 year old son has gotten himself into quite a mess! Thinking that he knows so much (as most 20 year olds do) he decided he would go to a used car dealer and buy a car. They sent him to the bank for a loan and this was granted to him. He had a poor work history and only been at his job for 2 weeks and they still gave him the loan and the car. The car broke down a few weeks after the purchase but since he had lost his job already and did not have the money for the monthly payment he did not go talk to them about the car not working, right away. When he did, they told him about the "insurance" that was in the original contract to have the car repaired for a deductible but he could not find his copy of the contract so they wouldn't help him out in that area. He was out of work several months and is very behind in payments to the bank and dealer. He has other unsecured debt (1 credit card, phone bill etc). The bank of mom and dad are closed for business but willing to assist in finding answers so that he can learn how to dig out of the hole he has jumped into. Should he allow the repo-man to take the car, consider debt consolidation, bankruptcy? He has about 15 18 k of debt including the car loan. Your suggestions please.

20 yr old son

I would look into all my options for him. First, of all if he is able to work, make him get a job. Then, he needs to set up a budget to get on to save money. Maybe he could live at home until he gets this mess cleaned up. Talk with someone in debt consolidation that might help also. Look into all that you have mentioned above. It never hurts to try all of them. Lots of luck, let us know what happens with him.

lrhall41

Submitted by on Tue, 11/14/2006 - 05:55

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Well, depending how much the car loan is for and what the car is

Well, depending how much the car loan is for and what the car is worth, and the extent of the problems that are keeping it from running...

If they know they won't be able to get anything for the car if they try to sell it, they won't bother picking it up. But your son can initiate a voluntary surrender. That is, you bring the car to them and it saves a $300 repo fee. They will sell it for whatever they can get on the wholesale market, and your son would still be responsible for any deficiency balance.

Short of that, try writing them a letter. Have your son explain that he had the car for two weeks and lost his job, and all he can afford to send is $50/month until he gets back on his feet. It doesn't hurt to try.

The insurance they were talking about is just a requirement that the borrower agrees to keep collision and comprehensive protection on the vehicle at all times while it is being financed; it's not an actual policy that came with the loan.

Since he has just one credit card, try writing them a letter too; or call the customer service and discuss ut with them. Most credit cards are willing to stick you on some type of monthly plan, as long as it hasn't been charged off yet.

As for the phone, they will end up disconnecting it if the balance is not paid and then send it to a collection agency. It will be a while before they do anything in terms of a lawsuit.

Think of bankruptcy as a last resort. Sure, he's in a tough bind now, and it is affecting his credit. But a bankruptcy will affect his credit for the next 10 years, and may keep him from getting a car the next time around...

This is a problem he can work through, as long as he's willing to put in some effort and come up with some type of arrangements. It'll be tough until he gets back on his feet, but when he gets through the situation it will look a lot better on his credit than if he just went bankrupt.

lrhall41

Submitted by DebtCruncher on Tue, 11/14/2006 - 06:07

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