Default on auto loan and collections advice - The Bills.com Blog

I recently have power of attorney for my father who is ill. My father co-signed (signed as guarantor) two car loans for my brother who has defaulted on one and about to default on another. The most recent car loan is for about $40K. What can my brother do to avoid defaulting on the loan, besides pay? He's broke and is looking for a second job. What options does my father have (or do I as power of attorney? Does taking the car back to the dealer make sense?

Apart from paying for the loans, there is little you can do to safeguard your Father's credit rating, if you default on these loans. Taking the car back to the dealer is as bad as a repossession, as far as credit bureaus are concerned. I would say try refinancing, but given that your brother has already defaulted, I doubt that he will be successful in getting another loan, with better payment terms.

I am about 4 mos in default for my car note. I am a single mother of two and need help! I had never been late on my car note before and would have had the car paid off Oct 2009. I lost my job in July and that is when this all began. I contacted them in Aug to negociate deferred payments but they wanted me to find a job before they would approve it. Honestly, I am afraid to call them but I need my car. They are harrassing my parents even thou it is my Auto Loan. Help my keep my car. Thank you

You need to see if you can refinance the vehicle with another lender so that the payments are affordable to you. you should have done this right when you knew that you were going to have problems paying the loan. If that does not work, then I do not see any other way apart from borrowing the money from a close friend or a relative to tide by this situation. Keep im mind that the lender can initiate repossession any time, ans that will hur your credit even more than these missed payments.

I have a car I cannot afford the payments. I would like to surrender the car to the loaner, but I do not want my wages garnished. Is that possible?

That is not possible. Once you return the car, your loan company will sell it and apply the proceeds to your loan balance. If any balance still remains (which is the case most of the time as cars don't sell for much in these auctions) they will still continue their collection efforts on the balance, which, depending on your state laws, could lead to wage garnishment as well.

I have to give up my car.Out of work 18 months,unemployment about to run out,no jobs in sight.I have not missed a payment, but what can I expect from the lender in reguards to to collections on what I have left in my accounts that total less than $9,000.00...help.

Please see here for collection actions on deficiency balances: http://www.bills.com/blog/creditor-actions-on-a-deficiency-balance/

i was wondering if my mother 78 yrs. old is wanting give her car back to the lender she can no longer afford she is on a fixed income will they sue her for the balance

If your mother owns significant assets, such as her home or a retirement account, then the creditor will see their chances of recovering the deficiency balance through a lawsuit as good. However, if your mother owns no significant assets and is living on a fixed retirement income (such as SSI), then their chances of recovery are small and they will probably not go to the expense of suing her. Regardless, the creditor will make an attempt to collect the deficiency, and if unpaid, will be a source of irritation to your mother.

I have a friend in trouble here in Arizona, his girlfriend left him and took the car that he had purchased with her (both signed he is the main signature on loan) to California. Before she left him she ceased payments for several months (he was not aware as he worked she paid bills). The autoloan is now in default, and he can not afford to pay it. The car is not in his possesion as she has taken it (registration is for both of them) and the loan company is threatening to put him in jail. He explained where the car was, they seem not to care what he says or offers, and he can't physically get the car back from her. I can't afford to bail him out what options does he have. He realizes that his credit is toast he just wishes to be able to stay out of jail.

Sean, never believe legal advice from a collections person. No one has gone to jail in the US for debt since 1869. Even Bernie Madoff, who bilked $65 billion from investors, didn't go to prison because of his debts -- Madoff was guilty of fraud. But back to your friend's situation. He needs to talk to an attorney in Arizona now to discuss his rights and obligations under the loan agreement and Arizona law. Your friend may need to report the car as stolen if he is on the title and it was taken without his permission. However, given the muddy ownership situation, that should only be done under the advice of an Arizona attorney.

I have been paying monthly payments on a car that has a blown engine. My credit is poor, but I am current on mortgage and all bills. If I stop paying the monthly bill and let the bank take it- owe about $4000.00 still- will I jeapardize my ability to get parent loans for my kids that are in college? That is my only concern regarding my cridit at this point.

With apologies to the late Jim Croce, you don't tug on Superman's cape, you don't spit into the wind, you don't pull the mask of that ol' Lone Ranger, and you avoid repossession. Yes, repossession will harm your credit score, which may or may not affect your ability to get a student loan. See my advice to another reader in my blog titled Information on Auto Loans and Repossession Advice.

i just baught a car here in California two weeks ago, but i realized that i realy cannot afford the payments. I spoke to some car salesmen and they mentioned "first payment default" They told me the contract is not any good until I make the first payment. Is this true and do you have any information on this?

If the salesmen were California attorneys, then there is a good chance they would be dispensing accurate legal advice. Alas, their statement to you was not accurate. "First payment default" is a right creditors reserve for themselves to repossess a vehicle (or some other secured property) immediately if the borrower misses the first payment. Customarily, creditors will wait more for the borrower to miss more than two payments before beginning the repossession process. Your contract is not canceled. You are still bound by its terms, unless you have a legal excuse to breech the contract. Unfortunately, buyer's remorse is not a legal excuse. See voluntary repossession and collections advice to learn more about your rights in the collections process