are clear about the interest rate and all of the other terms of the plan. For example, if you default on your payment plan, will the medical provider refuse to provide you (and your loved ones) with any additional care in the future until you get caught up?
File for bankruptcy. These days, past due medical bills are one of the leading causes of bankruptcy. Consult an attorney if you believe this is your only option.
Tip: To avoid having medical bill problems in the future, negotiate future medical care with your doctor in advance.
Many doctors will give you a discount if you talk to them before they give the service and if you are willing to pay in cash up front.
Avoiding the Loss of Your Car in a Repossession
Getting behind on your car payments is like playing with fire. With little or no warning you may lose control of your situation with disastrous results — your car could be repossessed! Therefore, if you are having trouble keeping up with your car payments, it’s important not to ignore the problem.
You have several options for avoiding repossession. These include working with your lender, refinancing your car loan, and giving your car back to your lender.
Renegotiate Your Loan Payments
You may be able to buy yourself some time to get your finances stabilized by convincing your auto lender to agree to lower your monthly payments temporarily or to let you make interest-only payments for a couple of months. However, be aware that if you do this, the money you should have been paying will be tacked on to the end of your loan or you’ll have to pay your missed payments within a certain period of time. If you pursue this option, you’ll probably have to demonstrate to your lender that your financial
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problems are temporary and that you’ll be financially stable soon.
Pursue this option before you have fallen behind on your car pay-ments, not afterward!
Refinance Your Car Loan
If your credit is not ruined, you may be able to refinance your auto loan and stretch your payments out over a longer period of time than your current loan so they will be smaller. Although with this option you may pay more over the long run on your car loan, a refinance could help you keep your car. Talk with your bank about refinancing your car loan. Credit.com also offers additional auto refinancing information. Whatever you do, be sure to work with a reputable lender.
Find Someone To Take Over Your Payments
Find someone who is willing to take over your car payments. If you find a qualified buyer for your car, your lender may agree to let the buyer assume your car loan. Ask your lender if this is an option for you.
Tip: Instead of buying a car and financing the purchase with a car loan, many consumers lease their cars. They may do this in order to avoid a large down payment on a car, in order to get a low monthly payment, or for some other reason. One of the downsides associated with leasing, however, is that if you begin having prob-lems keeping up with your lease payments, getting out of the lease before it’s up may be very expensive. If you find yourself in this situation, go to www.SwapALease.com or www.LeaseTrader.com for help finding a consumer who can take over your lease.
If you can’t figure out a way to deal with your car loan and you believe that it’s just a matter of time before it’s repossessed, don’t sit back and wait for it to happen. Instead, exercise one of the following options:
•• Sell Your Car
Selling your vehicle is a good option assuming that the outstanding balance on your car loan is less than what your car is currently worth. Give your lender the sale proceeds.
You will almost certainly net more money by selling your car yourself instead of letting the lender sell it at a public auction.
The more your car sells for, the smaller your loan deficiency will be, assuming your car does not sell for enough to pay off the outstanding balance on your loan. A deficiency is the difference between your loan balance and what your car sells for. Your auto lender is entitled to collect that amount from you after your car is sold.
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Warning: If you sell your car for less than what you owe on it, you will have to come up with the difference in order to transfer title to the vehicle into the buyer’s name. The only exception would be if your lender agrees in advance to let you sell the car for less. If your lender does, be sure to get the agreement in writing before you sell your car.Tip: If you need a car, consider trading your car in for some-thing that costs less to operate.
Voluntarily Give Your Car Back
Giving your car back to your auto lender rather than waiting for the lender to repossess it may save you money because the lender will avoid the costs associated with taking your car — costs you would have to pay. If you decide to voluntarily return your car to your lender, ask for some concessions, such as forgiving a deficiency, or not reporting it as a voluntary repossession to the credit agencies.
The lender may agree because you will be saving it the time and expense of repossession. Be sure to get any concessions in writing before you give your car back to the lender.
File for Bankruptcy
You may be able to stop a repossession by filing a Chapter 13 reorganization bankruptcy. If you file this kind of bankruptcy, you will have up to five years to pay off the balance due on your loan.
Furthermore, you won’t have to pay any of the loan payments you have missed.
How a Repossession Works
In most states, your auto lender can take your car back without giving you any prior notice and without getting the court’s permission. Therefore, if you are behind on your car payments, you may wake up one morning or leave work one afternoon and discover that your vehicle is gone. A “repo man” — an employee of your lender or an employee of a company hired by your lender to take back your car — will have taken it so that your vehicle can be sold, usually at a public auction. You will probably be notified about when and where the auction will take place so that you can try to buy back your car if you want and assuming that you have the cash.
Some states have laws that put restrictions on how a repossession can take place. Call your state Attorney General’s office to find out if your state has such a law and if it does, what rights you have under the law.
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Warning: Every auto lender has its own policy for taking back a vehicle for non-payment. The policy that applies to your loan is probably spelled out in the contract you signed when you financed your vehicle. However, most lenders will initiate repossession once a consumer has missed three consecutive car payments, although some will act sooner. In fact, a lender can legally repossess your car if you are just one day late on your auto loan, unless your loan agreement says otherwise! Also, even if you are able to get caught up on your past due car payments, your loan agreement may give your creditor the right to call the loan, which••
means that the lender can require you to pay the full outstanding balance on your loan immediately. If you don’t, the lender can take your vehicle.
What The Repo Man Can and Can’t Do to Take Your Car The law in every state says that a repo man cannot breach the peace when he is taking your car. Although each state defines breaching the peace differently, generally it means that the repo man cannot use physical force or threats to take your car. Also, if you are present when the repo man comes to get your car and you tell him not to take it, he cannot ignore your demand.
A repo man is also prohibited from:
Coming to repossess your vehicle with a police officer or another government official, unless the officer or official has a court order to seize your car.
Breaking into your locked garage to take your car.
However, he is legally entitled to come onto your property.
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Warning: In some states, it’s illegal to hide your car in order to prevent it from being repossessed.After Your Car Has Been Repossessed
Once your car has been repossessed, the lender will make plans to sell it, usually in a public auction. Once it has been sold, your lender will apply the sale proceeds toward loan balance and toward the expense incurred for repossessing, storing, and selling your car.
As we already explained in this chapter, your car will probably be auctioned off for much less than what you owe on it and your auto lender will be entitled to look to you to pay the difference, or defi-ciency. If you do not pay the deficiency within a certain period of time, the lender may turn that debt over to a debt collection agency or sue you for the money. The larger the deficiency, the more likely
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apt the lender is to take one of those actions.
If the lender does not try to collect the deficiency, you may owe taxes on the amount forgiven by the lender. You may be able to have that tax bill wiped out if you can show the IRS you were insolvent at the time the debt was forgiven. Consult with a tax expert to determine your liability and what you may be able to do about it.
Avoiding the Loss of the Stuff In Your Car in a Repossession
If you are afraid that your car is going to be repossessed, re-move all of your personal property from it, including your dry cleaning, CDs, maps, cell phone, spare tires, sporting goods, child car seats, and so on. If your car is repossessed and you did not remove such items beforehand, send your lender a let-ter asking that the articles be returned to you. Although your creditor is legally required to comply with your request, don’t be surprised if the creditor tells you that there was nothing in your car when it was taken. Also, if you installed a radio, CD player, TV or VCR in your car after you bought it, the creditor may argue that the items are integral parts of your vehicle, and therefore, you are not entitled to get them back. You may need to consult with a lawyer if either of these problems happen to you.