If you surrender a car to the bank that you can’t pay for, what happens then?

UPDATED: May 22, 2012

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

UPDATED: May 22, 2012Fact Checked

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

If you surrender a car to the bank that you can’t pay for, what happens then?

Asked on May 22, 2012 under Bankruptcy Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

It depends on what the lender or financing company wants to do. You are obligated to repay the principal balance borrowed to purchase its car in its entirety. The lender has the right to repossess the car as one way to seek payment, but it is not limited to taking the car; if the car is worth less than the outstanding balance on the loan, the lender or financing company may sue you for any amounts owed in excess of the car's value.Thus, it is up to them whether to take further action or not.

However, if they agreed to accept the car back as payment in full of the debt, then they cannot sue you--their own agreement would preclude or prevent them from doing so, and if they do try to sue you, you could raise that agreement as a defense ("accord and satisfaction") to their claim.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption