What Happens If I Can’t Make My Car Payments?

Unexpected things happen in life—things that sometimes negatively affect our finances. When this happens to you, it is incredibly difficult to keep up with regular payments on everything we owe. Often car payments are the first thing people find themselves incapable of paying.

When you fall behind on your car payments, you can quickly find yourself facing repossession. After just 30 days of nonpayment, your loan will be marked in default, and after 90 days, the repossession process may begin. As you can see, the process happens quickly, and once repossession processes begin, there is very little you can do to stop it. If your car is repossessed, you don’t even necessarily clear your debt. You will still owe the difference between your loan balance and the sales price after the fees incurred repossessing the car are taken out.

What Can I Do to Avoid Having My Car Repossessed?

Luckily, hope is not lost. If you can’t make your car payments, you have options if you take action right away. The following are the most common ways that you can deal with this situation and avoid having your car repossessed.

• Negotiate with your lender to defer or modify your loan payments: If the situation is temporary or you are only just barely unable to make your car payments, you may be able to negotiate with the lender for a modified payment schedule. Since it is better for your lender to get less money than expected than to have you default, your lender may be open to this option.
• Refinance your car loan: If you have a “good” or “excellent” credit score, you may have the option of refinancing your loan at a lower rate, so you can afford the lower payments. It’s important to note that for many people, this option is also only viable in situations where the financial difficulty is temporary.
• Sell your car: If you can’t make the payments anymore and you don’t know how you will be able to in the future, sometimes selling the car and paying off the loan is the best option. Just remember, though, that if your car is worth less than the loan balance, you’ll still have to pay the difference.
• Turn the keys in: If you genuinely can’t figure out a way to avoid repossession, it may be worth considering turning your keys over to the lender directly in order to avoid the repossession fees being added to what you owe (in what is known as a voluntary repossession). You will still be responsible for any “deficiency” or leftover balance after the car is auctioned off. While this option may sound good if you are feeling desperate, it generally is not the best way to go in the long run. You will still incur the same credit penalties as if your car was forcibly repossessed.
• Declare bankruptcy: If your inability to make your car payments is part of a greater pattern of overwhelming debt, you may want to consider bankruptcy. While many people think this is a negative option, it is a way for you to get a clean slate financially and can often be a very positive choice in the long run. You may even be able to keep your car, depending on how you file.

No matter what you are feeling right now, you have options—no matter how dire your financial situation may seem. Discussing these options with an experienced bankruptcy professional may help you decide which option is best for you more easily. Call Luftman, Heck, and Associates today at (888) 726-3181 for Ohio debt help to get unbiased advice. We offer a free preliminary consultation, so you risk nothing by seeking help. Your car does not need to be repossessed; you have options. We’ll help you find them.