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If you took out a car loan and find yourself unable to make your monthly payments, there are several options available to resolve the issue, including vehicle repossession. Sometimes other immediate financial responsibilities arise that force you to prioritize some payments over others. Below are several steps you can take if you can't make a car payment. 

What To Do If You Can’t Make A Car Payment

Talk to Your Lender

vehicle repossession Although you may be tempted not to take action once you determine that you can’t make a car payment, it’s not a good idea to do so. Your inaction can lead to involuntary vehicle repossession. You should speak with your lender and explain your financial situation. Most lenders are willing to work with people in financial peril, and they might offer to defer payments to the end of the loan or even refinance your loan.

Consider Selling the Car

It may not be the first choice of any car owner, but hard times call for tough measures. Consider relieving your financial burden by selling the vehicle to an interested party. If you are able to sell the car for an amount sufficient to pay off the loan you will preserve your credit.  If the loan balance exceeds the car sale price, you can contact your lender and see if they will agree to accept the sale proceeds and release the lien to allow the sale to go through.  You will likely sell the car for considerably more than the lender would get at auction, so often this is beneficial to both you and the lender.  You can also request that the lender release you from further liability but they do not have to do so.

Surrender the Vehicle

Voluntarily handing over the keys to the lender may seem like giving up, but you’re maintaining more control and giving yourself more options than an involuntary vehicle repossession. If you choose this route, you will likely experience some damage to your credit. However, a lender may be willing to reduce or forgive any remaining amount owed.

File for Bankruptcy

Filing for bankruptcy will initiate an automatic temporary stay on any vehicle repossession in action against you. You will need to decide if it's in your best interest to keep the car. For those filing Chapter 7, it may be easier to surrender the vehicle and have what you owe discharged by the court. A Chapter 13 filer will likely be able to keep their car as long as they pay the required balance through their plan and keep their Chapter 13 repayment plan current.

 

 

If you've considered vehicle repossession or can’t make a car payment, Robert A. Schwartz, in Monroe County, NY, will ensure you understand your options and find the most beneficial solution for you. For more than 30 years, he has helped clients burdened with real estate, bankruptcy, and car loan debt. To schedule a consultation, call (585) 334-4270 or visit his website for a full list of his services. 

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