What assets are at risk if you voluntarilygive your car back to the finance company?

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What assets are at risk if you voluntarilygive your car back to the finance company?

My son is 51 years old and shares an apartment with me. I am 74 years old and on social security. He has kidney failure and has been placed on Social Security Disability. He has had 3 surgeries last week to remove lower limb on left leg. He cannot work. He has a car that he owe 16,400 on. If we send the car back , can the finance company go after his bank account or a second vehicle he owns outright?

Asked on March 5, 2012 under Bankruptcy Law, Minnesota

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You cannot make a lender take the car back and give up any claims, though they can choose to accept the car back as settlement of all amounts owed--you can and should probably discuss this with them, though if they do agree to take the car back and drop any claim for more money, get that in writing to protect yourselves.

If they don't agree to drop any claims, then if the current value of the car is less than the current outstanding balance on the loan, they can sue for the difference. (Also check the financing agreements--there may be additional penalties or fees they can seek when there is a default.) If the car is worth much more then the current loan value, you are in much better shape, since there may not then be any amounts due and owing, after they get the car back, that they can seek.

However, assuming that the current loan balance (and any penalties in the agreement) exceed the car's value, the lender could, at its option, sue for the rest of the money owed. If they sue and win, getting a judgment in their favor, and your son still does not pay, they could try to recover the money otherwise, such as by going after money in his bank account or other assets/property (like a car) which he owns.


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