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Ellen
Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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LOST JOB, GOT ANOTHER AT REDUCED INCOME AND NOW AM UNABLE ...

Customer Question

LOST JOB, GOT ANOTHER AT REDUCED INCOME AND NOW AM UNABLE TO AFFORD TO CONTINUE TO PAY FOR A BOAT LOAN WHICH I HAVE HAD FOR 10 YEARS. IT HAS BEEN FOR SALE FOR A YEAR WITH ONLY OFFERS AT LESS $30,000 LESS THAN WHAT IS OWED. I HAVE ASKED BANK FOR SETTLEMENT BUT THEY "WON''T SETTLE AT THIS TIME". I CAN PAY ALL MY OTHER BILLS BUT NOT BOAT LOAN. WHAT WOULD BE THE EFFECT FOR ME BETWEEN LETTING BANK TAKE BOAT OR FILING BANKRUPTCY?
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 8 years ago.
Hello,

Please tell me what state you reside in and what other assets you have.
Customer: replied 8 years ago.
Arizona. Only assets I have are 2001 car, $20k in 401k and an investment house in process of being fixed up.
Expert:  Ellen replied 8 years ago.

Hello,

Thank you for your information. I am sorry about your situation.

Unfortunately if you do not pay the loan, the lender may foreclose on the boat.

Typically lenders will reduce any deficiency to judgment and attempt to collect on that judgment against the borrower's assets or wages.

If you choose to file a Chapter 7 bankruptcy, the deficiency on the boat may be discharged. However you may lose the investment property and any value in the vehicle above $5,000. You would likely be able to keep the 401K.

As an alternative, you can contact the lender and try to negotiate the surrender of the collateral (the boat) for full settlement of the amount you owe. Typically lenders are more receptive to this plan after at least one payment has been missed.

This procedure allows you to transfer your boat voluntarily to your lender in exchange for having your debt or deficiency forgiven. This will not save your boat, but it will help you with your chances of getting another loan in the future. Although it is a negative strike on your credit rating, it is less harmful than a boat repossession. The lender benefits because the lender does not have to waste time and money on the repossession.

I hope that the information which I provided was helpful to you.

Best wishes for a successful outcome. If you have additional questions, please do not hesitate to submit them to me directly.

Thank you,

THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE

Ellen and other Bankruptcy Law Specialists are ready to help you
Customer: replied 8 years ago.
The house deed is in an a single member LLC does that matter?
If I surrender the boat can the bank refuse and if so then what?
Expert:  Ellen replied 8 years ago.
Hello,

The house deed is in an a single member LLC does that matter? No, since you are the member.

If I surrender the boat can the bank refuse and if so then what? The bank can refuse. However when they sue you for the deficiency, you can counter that they would not permit you to sell the boat and they would not repo the boat to sell.

I hope that this helps.

Thank you,

THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE

Customer: replied 8 years ago.
I don't want the boat since I can't afford it, so I'll gladly surrender it. If they take boat either voluntary or involuntary and get a judgement (no Bankruptcy) can they force me to sell house and car or do they give me terms to pay off balance?
Expert:  Ellen replied 8 years ago.
Hello,

Technically you can be forced to sell the house/car but this is not the typical result.

Typically, once the deficiency is reduced to judgment, the bank will lien your assets and allow you to pay on a payment plan.

Thank you,

THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE

Customer: replied 8 years ago.
Okay..So boiling it all down would you say not filing bankruptcy and dealing with bank solely has potentially less effect on me?
Expert:  Ellen replied 8 years ago.
Hello,

Based only on what is contained in your post, I think that you should first try to deal with the bank as it may have less of an overall effect on you. You can always reevaluate at a later date and file bankruptcy if need be.

I hope that this works out for you.

Please CLICK ACCEPT so I can receive credit - Bonus = job well done.

THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE

Customer: replied 8 years ago.
Thanks I do to..

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