COMPLETE CAR DEBT GUIDE

When a vehicle owner defaults on his car loan, the vehicle will often be repossessed by the lender. When repossession occurs, the lender will take title and sell the vehicle for what is known as a “commercially reasonable” price. This means that the lender does not have to get full value for the vehicle. In fact, the lender can often sell it at a fraction of the value and come after the original borrower for the difference. Though not all states make the borrower responsible for the difference in sale price and amount owed, some will force individuals to pay this “deficiency”. For those faced with this problem, there are many ways to go about curing the debt.

Working directly with the lender to pay down the debt

The best option, of course, is to pay off the debt. People who find themselves in this position are almost always strapped for cash or they wouldn’t have put themselves in the tight spot in the first place. Even with that being said, there are ways to work with a lender on a payment plan. The smart move is to contact them as soon as possible and let them know that you are willing to pay off the debt. Tell them your circumstances and work with them to come up with something that makes sense. They will often be more than willing to take your small payments rather than selling the debt to a collection company.

Settling the debt outright

One good option is to settle debt outright. For people who have access to some liquid funds, this can be a good way to get a discount on the debt amount. Some will choose, as well, to take out a home equity loan to settle the debt. This is a riskier choice because it puts your home on the line, but it can save a lot of money at the same time. Settlement companies can help people who want to negotiate with creditors in this way.

Discharging the debt through bankruptcy

Bankruptcy is a word that should be avoided at all costs. There is a good reason for this, since filing for Chapter 7 will leave a person with 7 years of financial strife. This should only be considered as a last ditch type of option and should only be used when the repo debt is combined with some other debt.