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In April, I moved across state lines to move back in with my parents due to financial difficulties, and have since been unable to find another job. Louisiana, the new state I live in now, won’t even let me have unemployment due to some "error code" that’s way over my head.

Anyway, this morning my car was repossessed. It is in a seriously upside-down loan: the value of it is probably no more than 2000 dollars, while I owe something like 9,000-11,000 on it. I do not understand repossession laws or bankruptcy, or whether bankruptcy should even be an option.

I owe approximately 3,900 dollars in other unsecured debts (fees, credit cards, deficits owed to schools, etc), plus whatever mystery debts I might have that I’ve completely forgotten about. I owe around 15k in student loans, which from my understanding can’t be effected by bankruptcy and are the main source of my problems. I don’t think this is a reasonable amount of money to file for a bankruptcy, but I’m not sure of what other options I might have.

Should I attempt to negotiate with the creditor of the car to maybe have it returned? (I don’t have work — but being that I’m 40 miles out of civilization, without a car, I will never be able to GET work.)

Should I surrender the car completely and let the bank resell it? Would I still owe the money left on the balance of the loan?

My long-term goals are to try and get back into school to get a degree after getting a secured job, but with my credit destroyed, I’m not sure how best to repair it from this point forward. Any advice would be appreciated. (( And while I know someone’s going to come on here and say I’m a deadbeat, bla bla bla, I’ve applied to over 400 jobs since I’ve been here and have only had failed, expensive interviews — you try doing that with only 8 dollars to your name. I know I work hard, so don’t waste your time or mine. ))
As usual, people post the "it’s your fault!" responses with no useful information — I’m looking for advice. You are not aware of anything that is or is not my "fault", for all you know a contributing factor to my move may have been that I need to take care of my elderly parents. I know what I owe and what I am responsible for — I am just looking to move forward without getting taken advantage of.

4 Comments »

1. 

   You will owe the bank the balance of the car loan after they sell it.

   Short-term, you seem to be "judgment proof" – there is nothing any of your creditors can do to force you to pay (no assets, no wages to garnish) – so you could just try to stick it out until you get a job.

   On the other hand, while the mere fact that you have filed a bankruptcy can appear on your credit report for 10 years, if you do the right things you can rebuild your score in less than 3. Can you pay off your debt in less than 3 years? If not, then maybe bankruptcy is a better way for you to go.

   Nearly all consumer bankruptcy attorneys offer free consultations. Take advantage of this to meet with one and get advice based on all of the details of your particular situation. You can find a referral at NACBA.org (National Association of Consumer Bankruptcy Attorneys).

   Comment by crbesq — July 27, 2011 @ 6:38 pm

2. 

   Ok, let’s look at bankruptcy first..

   As you say, your student loans likely can’t be discharged in bankruptcy. So, you’ve got $4,000 in unsecured debt and your car. The unsecured debt, I’m assuming, is delinquent. If so, you can probably settle it for around $2,000.

   Now, the car. You owe $10,000 on it, and you say it’s worth around $2,000. The bank will likely auction the car off, and get around $1200 to $1500. The bank will come after you, sooner or later, for the deficit of $9,000. You can likely settle that with them for around $4,000.

   Now, if you file bankruptcy, you’ll have to pay around $2,000 to $3,000 in fees. So, the question is, do you want to spend as much as $3,000 in fees to eliminate $6,000 in debt, knowing you’ll ruin your credit for as much as 10 years?

   If you think that’s a good idea, then keep it in mind, while you stockpile as much money as you can over the next several months. But, don’t file bankruptcy until you are forced to. In other words, don’t file bankruptcy because the bank may sue you for the $9,000 deficit on your car. Wait until they sue you and win. By the time that happens, something may have changed in your life, and you’ll be able to repay them without filing bankruptcy.

   As for getting the car back…I wouldn’t do it. For whatever reason, you weren’t able to make the payments on the car, and it was reposessed. I didn’t read anything in your message that said that something has changed since then, and you suddenly are able to make the payments. With an $8,000 deficit on the car, you aren’t going to be able to sell it and clear the loan. So, I’d let the bank have it. At least that way, you’ll be off the hook for the monthly payment for the time being. Save up some money, and go out and buy yourself a $2000 car and drive it for a while until you can save up enough to upgrade a little.

   Comment by Monte P — July 27, 2011 @ 6:38 pm

3. 

   1. You won’t get the car returned.
   2. The "error code" means, in simple English, "you quit-no benefits".
   3. How the hell can anyone owe 9-11,000 on a 2000 car? No one is that clueless. On second thought….
   4. If Unemployment is "over your head" no wonder you’re having trouble finding work.
   5. Yes, you owe the rest of the car loan after the car is sold.
   6. How can an interview be "expensive"?
   7. You are correct that your student loans will not be wiped out in a bankruptcy.
   8. Who told you to live "40 miles out of civilization"?

   Comment by Common Sense — July 27, 2011 @ 6:38 pm

4. 

   Never heard of a repossessed vehicle being returned – except in very rare cares where the repossession itself was an error (wrong vehicle).
   The decision to live 40 miles out of civilization is your own, and your financial situation cannot be blamed on anyone else.
   Lenders listen to hard luck stories every hour of their working lives, but there is nothing can change the fact that you were a willing party to a legally binding agreement and you are legally required to comply with that agreement in terms of paying off what you owe – or paying off a reduced amount agreed with the lender or the collection agency he passes the delinquent debt to

   Comment by Ed Fox — July 27, 2011 @ 6:38 pm

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