We owe $150,000 for a motorhome we can no longer afford or sell. If we return it to the finance company, they will auction it for probably $60,000 to $80,000 and we will owe the balance. We don't have chunks of money to give them. Do they have to be patient and allow us to make $50 monthly payments (for life), or can they force us to pay more? We lease our cars and rent our house. What can they do if they sue?
Recently I have received a flurry of messages from people with debt issues who ask variations on the same question: "My debt choices are A or B. Which is best?" For most people, debt resolution rarely comes down to an A-B choice. You have options and you need to understand all of them before choosing the best one for your circumstances.
Here, you have one overall problem — the potential for a $70,000 to $90,000 deficiency balance — but you face several intermediate issues first. Let us explore these intermediate issues.
First, you need to understand what happens with a voluntary repossession. The Bills.com resource I am about to recommend you read regards a passenger vehicle repossession. A motorhome is not a conventional passenger vehicle (they are taxed and licensed differently from a sedan, for example). However, when it comes to repossession, the law does not care if the title is for an automobile, truck, motorhome, trailer, motorcycle, boat, airplane, or any other conveyance licensed by the state. Read the Bills.com resource Advice on Voluntary Repossession to learn about the $70,000 to $90,000 deficiency balance you will almost certainly face.
A deficiency balance is an unsecured debt. Unsecured debts can be credit card debt, medical debt, a payday loan, or a deficiency balance, among others. Therefore, the second issue you need to understand are the rights of creditors and debtors in resolving unsecured debt. See Collections Advice to learn more about what actions creditors have the right to take.
Third, you need to understand your options for resolving the debt. You mentioned bankruptcy, but you have others. See What Are My Debt Consolidation Options?
Finally, you mentioned offering the creditor $50 per month to settle the debt. I doubt this will satisfy the creditor as it will not even begin to cover the interest expense of keeping a $70,000 to $90,000 account active on their books. See the Bills.com resource If I Pay a Small Amount on My Debt, Can I Be Sued? for a longer discussion of this issue. You need to resolve the debt in a more aggressive manner, all of which are described in the hyperlink I just mentioned.