If I tell the bank that I can’t afford my car anymore, what happens to the difference owed and what other consequences are there?

My husband has been unemployed for over a year and it’s getting harder to make the car payments. I lost my house to foreclosure last year but was protected by bankruptcy law for the difference owed on my house (I’m not sure how that worked).

Asked on October 29, 2011 under Bankruptcy Law, Ohio


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You'd only be protected by bankruptcy law if you had filed bankruptcy; assuming you had, that explains the protection against the unpaid balance on the foreclosed house. However, if you were  in bankruptcy last you, you could not file it again so soon, so bankruptcy protection is probably unavailing at this time.

If that is the case, then if the car is repossed, it will be sold or otherwise disposed of for value (e.g. auctioned). Whatever is brought in, less certain costs and fees of the sale, will be applied to the unpaid balance. You will still owe anything remaining after that. The lender will have the right to sue you for that amount. If they sue you and win--which they likely will, if you have defauled on the payments--and you still do not pay, they will have a variety of possible options to insure repayment: levying on a bank account, garnishing your wages, executing on (forcing the sale of) personal property, or putting a lien on any real estate you still own.

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