Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Sorry but that's not it as you put it. The only ( and it doesn't happen very often more like almost never) way it is it is if by the grace of Zeus and Apollo the car sells at auction for more than what the loan amount is. I think pigs fly when that happens
She will be living in the moment in a cardboard box.
What she us doing is a voluntary repossession. The bank takes back the vehicle and sells it at auction. Whatever difference between sold amount and loan amount she will be liable for. Your friend is not very smart. She will still be liable for that amount, her credit will take a further hit and the bank will sell her account to some creditor for pennies on the dollar who will hound her forever.
I think she is in her early 60s and doubt she will ever change. She does have a steady pension income from deceased husband.
I was a Credit Manager for a good portion of my working life, first in retail credit then in industrial credit. She sounds like a person who just doesn't give a damn, but here is what will happen: The lender will take it back and sell it for whatever they can get for it and apply that to the balance owing, then they will go after her for the balance. There is ALWAYS a balance.
Depending on what State she lives in, they could garnish her wages or put liens on any assets she has or will have in the future. We used to get people like her all the time and they were pretty smug about thinking we could do nothing, but sooner or later they will want to buy something or rent a home or apartment, and this will come up and bite her in the butt.
I had one lady who was downright nasty with us and basically told us to pound sand. About 3 years later she got married and they wanted to buy a home. Suddenly she had to face the reality that these things never really go away, so she came in all nice this time and asked what we needed to do to take that black mark off her credit.
The creditor can also issue a form 1099-G showing the debt as charged off and it appears as income to the person who turned in the car. Happened to a friend of mine just this week. He had already filed his income tax and on the 31st the 1099-G showed up with almost $9000 in income reported to the IRS. He had a truck voluntarily repossessed in 2007 and they sold it for $9000 less than he owed on it. He now has to file an amended return and pay taxes on that $9000. They got it in just under the wire of 7 years falling off his credit. The only real way to get out of the balance due is bankruptcy. He's just going to pay the tax on it as his income is very low and it won't be very much.
As far as another vehicle, the person in the original post can always go to a buy-here pay-here lot and get something. They're not real sticklers as far as credit, but do require a substantial down payment. Same with renting/buying a home. Either rent from an individual homeowner instead of an apartment complex or buy using owner financing. Her insurance is going to be higher (homeowners and car) as they both now check credit reports before issuing policies. Utility deposits will be higher as, again, they check credit, too.
You know, this whole business of financing cars (which are really just chattels) has gone beyond extreme craziness. We always used to buy used for cash, if we couldn't afford new without going into debt. The way credit reports and scores, and assumed future needs for yet more and more credit (which is really just DEBT) are being tossed around here, one would think that there was a mad race to jump onto the hamster treadmill of monthly payments while taking on overtime hours at work.
Most people have no clue what the items they purchase are really costing them...all they care about are the monthly payments! Are we that severely math-challenged in this country?? They want to pedal their arses around in expensive new wheels and keep their "credit scores" (debt scores) high. They use debt to finance a lifestyle that they cannot afford on their incomes.
Financing expensive things may allow you to look richer than you really are, but you are paying an enormous amount for that privilege. That is not the way to accumulate wealth. At least half the people that use "credit" (debt) cannot handle it well. Our society pushes this behavior onto us as if there were no alternative, when there is. Instead of assumimg a future need for ever-more debt for this young lady, you should thank her lucky stars that her "debt rating" will likely go down low enough that she will no longer be saddled with endless payments.
You know, this whole business of financing cars (which are really just chattels) has gone beyond extreme craziness. We always used to buy used for cash, if we couldn't afford new without going into debt. The way credit reports and scores, and assumed future needs for yet more and more credit (which is really just DEBT) are being tossed around here, one would think that there was a mad race to jump onto the hamster treadmill of monthly payments while taking on overtime hours at work.
Most people have no clue what the items they purchase are really costing them...all they care about are the monthly payments! Are we that severely math-challenged in this country?? They want to pedal their arses around in expensive new wheels and keep their "credit scores" (debt scores) high. They use debt to finance a lifestyle that they cannot afford on their incomes.
Financing expensive things may allow you to look richer than you really are, but you are paying an enormous amount for that privilege. That is not the way to accumulate wealth. At least half the people that use "credit" (debt) cannot handle it well. Our society pushes this behavior onto us as if there were no alternative, when there is. Instead of assumimg a future need for ever-more debt for this young lady, you should thank her lucky stars that her "debt rating" will likely go down low enough that she will no longer be saddled with endless payments.
Well, she is not young, but everything else you say is about right. I had mentioned in my postings that I loved this make of car, but in the back of my mind I knew I would never go out and get one. The base model starts in the high 20k or low 30s. I remember when Nissan was a car you bought because that was all you could afford.
It seems she has two choices. She can keep making payments or stop making payments. Either way it seems turning the vehicle over to the bank is pointless.
If she turns the vehicle over to the lender, the lender will sell it as quickly as they can and take whatever they can get for it. She will remain liable for the difference between the sale price and the balance of the loan (plus interest). She will be obligated to continue making payments. If she is going to make those payments, she may as well keep the vehicle.
If she is not going to make payments, they will file an action and obtain a judgement against her and garnish her checks. If she does not turn over the vehicle and stops making payments, they will eventually repossess the vehicle, file an action obtain a judgement and garnish her checks. However she may get to keep the vehicle without making payments for a year or more before they get round to repossessing it.
If she meets the requirements, she may be able to declare bankruptcy, keep the vehicle and re-negotiate the amount owed and payments without a judgement and garnishment.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
