Debt has a way of sneaking up on people. In the early stages, the problem may register only once a month as you make the minimum payments on your bills.
Next thing you know, you’re late with a payment and you get a call from a creditor. This causes stress, but perhaps not enough to change your habits or seek professional debt help.
Then the day comes when you receive notice that your car will be repossessed. That’s when it hits you: Without a car, you can’t get to work. If you can’t get to work, you could lose your job and with it, your income.
What can you do when you’ve reached the brink of this disaster? Here are some options:
Talk to your lender. If you’ve missed a car payment, don’t wait for the repo man to find you. Contact the lender to work out a payment renegotiation. If you can’t afford any payments, you can opt to give up the car. A voluntary repossession will at least save you from having to pay involuntary repossession fees.
If your car has already been repossessed, ask your creditor what you need to do to get it back. The lender may be willing to set up a manageable payment plan. If so, get the new deal in writing, and follow it to the letter.
Get your loan reinstated. If your car has been repossessed but you can pay off the past-due balance, you may be able to get it back after a certain period of time — especially if your car was repossessed without advance notice. If you were given notice, a reinstatement may still be possible, though your lender’s new terms may be more rigid than the original loan.
File for bankruptcy. This may be your best option if your overall finances are in disarray. Say, for example, you can’t make your car payments because your credit card debt is taking too much of your paycheck. Chapter 7 or Chapter 13 will put a temporary stay on the repossession, but you must file before your car is taken away. Florida residents cannot recover a repossessed vehicle simply by filing for bankruptcy.
If you do file for bankruptcy to keep your car, be sure to make all future payments on time or that automatic stay may be lifted, leading to the loss of your car farther down the road.