Monthly Archives: December 2017

What to do when your car isn’t worth the loan payments

Auto loan and credit card debt

By Attorney Ginger Kelly, December 15, 2017

I’m seeing it over and over again with folks in our Central Massachusetts area.  Car loans are so expensive and cars lose their value so quickly, it is causing harm to consumers.  As soon as the loan papers are signed, folks are strapped to payments they can’t afford.  It’s a shame and it makes me mad, the same kind of mad I get when I see what payday lenders can do to hard working families.

One person I know (I won’t mention her name), who earns less than $1200 per month in Social Security Disability Income went to a dealer to get a car loan on a new car.  She pays over seven hundred dollars a month for rent, yet the dealer down the street gave her a car loan.  Her car loan payments were over $400 per month.  What’s going on here?  This is robbery, in my opinion.

Another client I had a long time ago, purchased a new car for well over twenty two thousand dollars.  Less than a year later, she lost her job.  She could no longer afford her monthly car payments.  She had to do something so she tried to negotiate a modification of her loan.  Without her good paying job, the lender said no.  To keep her home, she lost her car and surrendered it moments before it was repossessed.  Then, the dealer auctioned the car to pay the loan.  The car brought in only a few thousand dollars at auction.  The outstanding balance she owed to her lender was well over twelve thousand dollars.  How does a brand new car loose over ten thousand dollars in value in less than a year?  The car had very little miles and was in almost perfect condition.  I don’t understand it.  This client was compelled to file a Chapter 7 to keep a lien from being placed on her home.  This is how it goes.  It’s sad but true.

Another couple purchased a vehicle in 2011.  The vehicle cost was over twenty thousand dollars.  They successfully made payments for over four years. Then, the wife got sick and couldn’t work.  This caused the couple to lose over half of their income.  They decided to downsize and only drive one car to save money.  They surrendered the car to the lender.  The lender, in turn, sold the car and then charged this couple with a fifteen thousand dollar deficiency on the loan.  This amazing couple, going through some very difficult medical issues, could not pay the deficiency.  They were barely making their mortgage payments. Eventually, the lender took them to court. The lender got a judgment lien against the only asset they had, their home. The couple was devastated. This is why they came to me for help.

My husband was talking to a colleague at work, just today, who asked him why he drives a used car. My husband replied, “Why would I want a new car that’s 50% discounted as soon as I drive it home and if something happens to me and I can’t pay for it, the car gets repossessed and I won’t be able to pay the amount the lender will charge me after the car is surrendered.” He added, “My wife deals with this all the time. She sees people suffering in this type of situation. Why would I put my own finances in jeopardy just to drive a fancy new car?”  My husband said it bluntly and truthfully.

Frankly, I’m baffled at the inflated prices of vehicles these days. I’m astonished at the shady things that seem to be happening to consumers who need to drive to work and school.  What is going on in the lending and auto industry?  Who doesn’t need a car these days?  Maybe this is part of the problem. Consumers need reliable cars, so they do whatever they think is best to get one.  But there is hope.

Several of my clients have had to think about debt consolidation or even try this until they consulted with me and discussed the differences between Chapter 7 and Chapter 13 bankruptcy and how this works.

Basically, a Chapter 7 is a total liquidation of all of your debts and a way to get a fresh start for most debt, but a person has to qualify first.  A Chapter 13 is a way to manage your debts by way of a three or five year payment plan.  In a Chapter 13, a debtor pays into this plan and then, after the end of the three or five years, comes out with a fresh start.  Bankruptcy is not for everyone, but it may be the only way to get rid of these not only annoying, but quite often unconscionable auto loan deficiencies.  For some people it’s the only way to stop creditors from placing liens on things like other cars and homes after they had to surrender their car or have it repossessed for one reason or another.

Bankruptcy, for some, is an option worth exploring.  Most Bankruptcy cases will cost anywhere from zero dollars (for qualifying pro bono cases) up to four or five thousand dollars, for some Chapter 13 cases and anywhere in between.  Attorneys cannot tell a client how much a bankruptcy case will cost until they have the opportunity to evaluate the work involved, the type of Bankruptcy needed, the complication of assets and debt and other factors.  But the good thing is, most bankruptcy attorneys offer a free first consultation for most clients.  If they don’t, I suggest that you think about visiting a bankruptcy attorney who does.

The next question my clients ask, I’ll touch briefly upon.  How does someone pay for a Bankruptcy if they don’t have any money?  Well, it’s not easy but it’s do-able.  Some clients sell collections or other things to find the money.  Most clients use tax return refunds to pay for their new start in life.  This is a very good option, indeed.  Still others borrow the money from friends or relatives (I do not suggest that you do this, however, sometimes it’s done anyway).  They ask relatives or friends to help out with a gift.  Christmas temp jobs are wonderful for helping out in a pinch.  Most of the time, where there is a will there is a way.  People find ways to pay for their bankruptcy and are happy to do so.

Tax season is right around the corner.  If you are thinking about whether or not to fix the roof of your home or pay your credit card debt, you might want to consult with a bankruptcy attorney.  If your car payments are too much of a burden for you and you are thinking of surrendering your car, you might want to consult with a bankruptcy attorney.  These are the real issues to consider in this coming tax filing season. Your next tax refund may be the way you too can enjoy a new lease on life and not to be bothered by the heavy burden of bills you cannot pay.

The Law Office of Ginger B. Kelly is a boutique type law firm.  We are not Big Law.  We only handle a small number of clients at one time.  Each client gets personal attention and care.  Each client gets hours and hours of time devoted to their particular case. Our office is in an easy to find location in Charlton. This means you don’t have to drive to the big city of Worcester or Boston and pay for parking. We not only offer free parking, but free coffee in a calm and peaceful place. Your discussion with our senior attorney is very confidential. Your first consultations will last about an hour in a stress-free, homey type atmosphere.

If you want to try a lawyer who is different, a new type of lawyer, Attorney Kelly is the one. Attorney Kelly is a lawyer who is interested in cultivating a more peaceful, kind and gentler approach to law. Her practice is unique. Her zealous advocacy is tempered by her high ethical standards. Her love for people provides the foundation for her attentive personal service. As one client put it, “This is like an old fashioned law office, very comfortable.”

Book your appointment now and explore your best options for the New Year.  We’ll have a nice pot of coffee waiting for you when you visit.

Good luck and have the Happiest of Holidays!

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ABOUT ME: Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture. To find out more, visit, http://www.attorneykelly.com or call us at (508) 784-1444.
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NOTICE: This is an Advertisement. This post is not legal advice. Consult your attorney. Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet. Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other. We can not stress enough, if you need personal legal advice, always see your attorney. Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice. Seek legal advice and representation from your own personal attorney.

Copyright © 2017 by Ginger B. Kelly, Esq., all rights reserved.

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Filed under Auto Loans, Bankruptcy, Chapter 7, Choosing a lawyer, Collection, credit card debt, Debt, Debt Collection, Deficiency, Hiring Counsel, Judgements, Law, Lawsuits, Legal, Liens, Massachusetts, practical stuff, Repossession, Rhode Island, tax refund, tax return, Uncategorized