Should I file bankruptcy?

The only thing keeping me underwater financially is my boyfriend’s car. He can’t afford the monthly payments and he has a ton of negative equity on the car. That means we can’t get anyone to buy it or even trade it in for a cheaper car. We aren’t sure how to get rid of the car. Without it, we would be fine.

Asked on August 6, 2014 under Bankruptcy Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

Unless you are a co-signor or guarantor of the loan, his car finance problems are not yours: you may be voluntarily helping pay for the car, but unless you are on the loan, you are not obligated to do so and could stop.

If you  are on the loan, then there is no way to get out from under it other than paying  it off or if the lender allows you out. It is possible--but *very* unlikely*--that the lender will voluntarily take the car back, perhaps with some partial payment of the loan balance, and then consider the loan as paid; but since there is evidently negative equity, this is, as stated, highly unlikely.

As to whether you should declare bankrupty: bankruptcy will affect your credit for years to come, making it more expensive to borrow and finance, such as for another car, furniture or appliances, a business loan, or a home; it will hurt you on checks relating to renting or anything else for which credit is checked. Avoid it if at all possible; even if it's a struggle, you're usually better of paying than filing--it's usually only when you can't pay that filing becomes a viable option.. You don't even need to decide now: only if the loan is defaulted on *and* you are sued for the money, do you need to consider if you'd be better of filing bankruptcy to get rid of that debt or not. (That is, unless and until you are sued, you don't need to worry; if they don't sue you, you would not have to pay.)

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