IfIhave a car loan with high payments what can I can do to get the payments reduced?

I got a loan with an ex-friend for a car and used my truck and the car (being purchased) as collateral. Now that the co-signer is no longer in my life I can’t afford the high payments. I don’t want to lose either of the vehicles and I was wondering if there is any way for me to get the payments lowered, so I can afford it easier every month.

Asked on July 23, 2010 under Bankruptcy Law, Wisconsin

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

1) If you declare a Chapter 13 bankruptcy, you may be able to "cram down" the loan on the car, having the court reduce it to an amount based on the then current value of the car, rather than on the original loan amount. For example: say their is $12k remaining on the loan, but owing to depreciation, the car is now worth $8k (cars usually depreciate faster than their loans are paid off). In Ch. 13, a court would reduce the amount owed to the $8k.

Of course, filing bankruptcy is very drastic action, affecting your credit and your ability to control you own budget. It may be overkill.

2) If an person was a cosignor on the loan, you could possibly sue him or her for the amount he or she would own for his or her share.

You should consult with an attorney to discuss the situation and your options. Good luck.


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