If I can’t afford my car loan payments, can the car be voluntarily returned to the bank without legal consequences?

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If I can’t afford my car loan payments, can the car be voluntarily returned to the bank without legal consequences?

Asked on February 11, 2012 under Bankruptcy Law, Alabama

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

"Voluntary" means voluntary on BOTH sides--that is, the bank can certainly agree to take the car back as full satisfaction of the debt, but they are not required to do so. You cannot force them to take the car if they don't want it; and even if they are willing to take the car, you cannot force them to accept it as full satisfaction of the amount. The bank is legally entitled to receive the full remaining balance of the loan; if the car is worth less than that, you cannot make them give up their right to pursue you for the excess. (Obviously, if the car is worthh more than the remaining balance, they will be more amendable to doing this.) So you can certainly discuss this with the bank, but you can't make them take the car back and give up their right to sue you.


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