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Should I stop making auto loan payments on my stolen car?
Hamurabi
MiamiRegistered User regular
MiamiRegistered User regular
So I made a thread about this back when it happened. tl;dr: My car was stolen on April 19th, 2012, while I had no insurance. The financing bank basically said 'tough titties' -- I was required by the contract to maintain insurance, and because I didn't there was no choice but to continue paying. I've made every payment since April 2012 -- 19 months @ $310.15/mo, or $5,892 -- in good faith because I was trying to keep my credit score/history intact.
But now I'm in grad school, and $310 every month isn't as manageable as it used to be. My folks also can't help me. My overall credit/debt situation is really awful; my score was 490 when my credit union checked a month ago, when I went to see if I could refinance at a lower rate.
Given how shit my credit already is, and given that it would be really tough to continue making these payments (there are 19 left, so ~$5800)... does it make sense to just stop paying?
The things keeping me from stopping (I just sent my October payment) is that I'm more than halfway through the loan term -- I've made 44 payments of 63 -- and that I could technically afford to continue making them, though it would really strain my finances while I'm here at school.
And as an aside... is bankruptcy not a realistic option?
But now I'm in grad school, and $310 every month isn't as manageable as it used to be. My folks also can't help me. My overall credit/debt situation is really awful; my score was 490 when my credit union checked a month ago, when I went to see if I could refinance at a lower rate.
Given how shit my credit already is, and given that it would be really tough to continue making these payments (there are 19 left, so ~$5800)... does it make sense to just stop paying?
The things keeping me from stopping (I just sent my October payment) is that I'm more than halfway through the loan term -- I've made 44 payments of 63 -- and that I could technically afford to continue making them, though it would really strain my finances while I'm here at school.
And as an aside... is bankruptcy not a realistic option?
Hamurabi on
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Bankruptcy is a really tough road to go down, and I would not get that process started if I were you unless you are literally ready to lose everything otherwise. We came out of a situation early this year where we had to consider it, and let me tell you the ramifications make it something you want to think very, very carefully about.
You'll be saddled with it for a decade.
With the information presented, paying it off seems like the right move.
Why didn't your insurance cover the theft?
we also talk about other random shit and clown upon each other
Some states don't require it, (however, as part of you loan you may have to maintain full coverage, but banks don't often check)
do this
Tell them the lack of your car directly impacts your ability to pay the car off and you can not afford to pay the amounts requested at this present time.
The trick is to make sure you're not talking to some drone but someone who can actually make a decision and approach a problem on its merits rather than by a cemented procedure.
You fucked up huge by not adhering to the terms of the loan wrt carrying comprehensive insurance. Of course the bank is going to tell you "tough titties". You already breached the terms of the note and in that amount it's absolutely worth it for them to sue you and have your wages garnished.
You should pay your debt.
Basically you got screwed, but the hard part to take is that it's your fault for not having the required insurance. It probably couldn't hurt to talk to a lawyer to see if there's ANYTHING you can do about it, but i think you're up a creek. Have you does research on-line? Im sure you're not the only person this has happened too. See what others did.
I mean, suppose that the vehicle hadn't been stolen: you'd be out of pocket for the loan payments just like you are now, but you'd also have all the extra costs involved in owning a vehicle (gas, maintenance). If you had a plan for paying the loan when you had the car, you should be able to follow more or less the same plan with it stolen; if you didn't have a plan or budget, that's not the bank's problem (and that's aside from the fact that you thought it was perfectly 'logical' and reasonable to basically lie to the bank to get them to loan you money, agreeing to buy insurance that you never bought).
Pay back the loan. If you could do it while you had the car, you can also do it while you don't.
Sometimes life's lessons are fucking hard to have to deal with.
You borrowed too much money to get something you could not realistically afford. From your posts, it reads like you're framing the issue like some sudden twist of bad luck or that the bank is screwing you over. That's not what happened (although the theft was certainly terrible) - you made a decision to burn the candle at both ends so you could drive a flashy new car in the short term, and this is the consequence of doing that.
If you can afford to make them, make them. The options for paying back a loan aren't "Pay back in a timely manner" or "Pay back when most convenient."
And yeah, your credit's crappy now but paying back this loan is literally one of those things that make it better. If it is tougher than you'd like try talking to the bank about restructuring. They should be happy to milk it for more money than risk you defaulting.
It'll be more expensive over the long run but I can certainly sympathize how much of a difference an extra hundred bucks a month for groceries can be.
Consider it a valuable life lesson overall and plan better next time.
You should pay it back. If you can continue to do so, do it. Like others have said, you're looking at least a decade before this goes away off your credit score. But they can continue to perform collections on you until you've paid it back.
Plus when you pay it off, your credit score will likely head into the 600s.
I have no idea why you're in the low 500s/high 400s, maybe your school loans.
So to the OP, the big question is. What are the penalties for not paying your car bill.
Your credit will suffer. It will be incredibly difficult to buy a car without some form of surety for the car owner. I know a car dealership in Denver that sells cars (and provides financing) to people with bankruptcy and they have an ignition interlock that cuts off if you are more than 10 days late on your payment (as a bitch you have to bring your car in every month, also the interest rates are pretty redonk as well).
You can be sued. If you lose a lawsuit you will have to pay them anyways, and your credit will be severely dinged, so that is the worst of both worlds.
It is depressing. Not paying bills is actually kind of depressing. I've been broke before. I know it sucks.
The advantage is the $300 a month you gain. Depending on your situation, this may be a substantial quality of life issue. Look at your costs seriously and develop a budget. This isn't something you should just on a whim stop paying your car payments. This is something you need to look at seriously, and if you can't afford it, you can't afford it, but it sounds like you can.
Negotiate with the loan holder. The last thing they want is to not get paid and have to chase after you for money. You can pay them less for a longer period of time, most of the time they are ok with that.
Is probably the only relevant bit. Chances are you should keep making them then. Your circumstances aren't bad enough to make the slim benefits of any of the other options outweigh the massive costs.
Try not to continue making mistakes.
Written on smartphone, so there will be typos. One of the hats I wear is bankruptcy attorney. I usually do complex commercial stuff on the creditor side, not individual 7s/13s, but have some passing familiarity with the stuff.
first thought: you want to approach this on a cost/benefit basis. People are couching this in terms of your moral obligation to pay the debt, using the word "should" and chastising you for making a mistake. Well, mistakes happen. The system is set up to (a) convince consumers to take on more debt than they should and (b) to screw you as the little guy in this scenario when mistakes or bad things happen. Whatever individual blame you have in this scenario is dwarfed by the complicity of the entities that have created this institutional envrionement. When this kind of stuff happens between two sophisticated parties (and it does), usually the two sides share the pain. Here, the bank/auto company will attempt to make you eat it all, because they can.
second thought: deebaser above notes you "breached" the note agreement by failing to insure your vehicle. You need to see a lawyer about that if it somehow became relevant, but it would surprise me if that is in any way a material breach(again, it could be depending where you are, hence your need to consult a lawyer. I don't give legal advice on the internet). Note agreements are laden with terms that, even if breached, would not justify declaring the loan in default and accelerating and trying to collect the whole thing. This is the same moralistic shaming others have done in different guise.
third: unless there are facts you aren't disclosing, filing bankruptcy is not worth the expense and trouble. You would essentially be saving 5.5-5k as bk filing fees will be 500-1k on the low side. It will impair your access to credit in the future. Garnishment is usually limited to 10% of your paycheck(again, this varies by state) and there is nothing for them to repossess here, so lenders recourse.against you seems fairly limited. You just don't want to default because the agreement is likely laden with a bunch of bullshit penalty interest rates, unilateral attorney fees clauses, and acceleration clauses that will make it much more difficult to pay off if you default.
fourth: While default is probably not a very good option for the reasons described above, the threat of default may be. All things equal, lenders like to avoid collections work. It sends good money after bad, even if in some individual cases they reap a windfall via penalty clauses. Abomination and Zepherin above suggested negotiating with the loan company and explaining the situation. This is correct.
but to be effective, you need to arm yourself with information. Three things you should know:
1) who to talk to. You need to reach a decision maker.
2) what the other side's position is. They likely have settlement guidelines they need/try to stay with in. Knowing what numbers are possible will make you a better negotiator.
3) how to talk to them. Coming across as typical whiny consumer will likely trigger nothing but contempt and scorn, as they have heard a thousand sob stories before and if they had any empathy they couldn't be working a consumer debt job in the first place. You need to identify the language frame that will let them do business with you rather than dismiss you.
so where to get this info?
1) you can try consumer debt clinics run by local legal aid orgs. If you let me know where you are I can google this for you.
2) it may be worth paying foe a lawyers time to consult on these issues, if you can find one intimately familiar with your lender. Doubtful you'll be able to, however.
3) other internet fora. Most forums on the topics are full of shtty pro se litigants who make sovereign citizen and admiralty flag arguments, but you might find someone whongot a good resolution from your lender. This is the option of last resort, however.
"I'm sorry you got put in prison for prostitution and drug dealing dude, there is no magic UCC that let's you not do jail time. I can't believe you spent $50 on a stamp."
Nope, I wasn't judging him. I was just thinking that his debt is not all that much in the big scheme of things, is $5k really worth it?
It wasn't a 'mistake'. It was a conscious decision to take out a large loan to buy a luxury car and gambling with insurance payments because he thought he had pretty good odds at winning that game.
And really, if some negative consequence was to come of his decision, I'm glad it was this and not that he managed to cause an accident with his car leaving the other person screwed out of medical coverage and/or transportation.
But hopefully he has learned a valuable if expensive lesson out of all this to always have car insurance with the only victim of his thoughtlessness being him.
None of that has anything at all to do with the topic of this thread, which is whether or not ceasing to pay or declaring bankruptcy is worth the money/credit hit, but it is definitely why people are being pretty judgy here. We don't really need to have the argument again.
Woops - had an edit reply that got posted by smartphone accidentally.
I will say for posterity in case people are searching for accident-related info, that if someone does get in an accident with an uninsured motorist as a driver, uninsured motorist coverage is mandatory and will cover your losses, often with no deductible. Given the lack of deductible it is often better to be hit by an uninsured motorist.