Q: So, basically, if she sells them then she will owe the lender the difference?
A. Yes, but the lender won't likely release their lien until they are paid in full, so she won't be able to sell them without first getting them paid off (which is why Terry said "she'll get more money if she sells-but it may be difficult to pass clear title until they are paid off - so private sale could be difficult," above)Q. Does a lender in a case like this ever set up a payment plan for the difference or would she be required to pay it all back at one time?
Most lenders won't release their lien until they are paid in full, so it is not likely that they will let her sell the items then set up payments on the balance. But, if her credit is really good, they might
.Q. She makes good money so I dont think bankruptcy would be a good option. She just needs to reduce these car payments and get rid of this boat.
If she makes too much money for Chapter 7
to discharge the debts, she can file Chapter 13, then the lenders will sell the items and the balance left (or whatever portion of it she can afford based on her disposable income) will be paid back over a 3 to 5 year (probably 5 year) Chapter 13 Plan. But, as Terry indicated, the amount she will have to pay if she lets the banks sell the items will be steep since they usually sell them for next to nothing and then charge her considerable fees to do it, plus the Chapter 13 includes attorney fees, trustee
fees, etc. So, if she can negotiate a private sale, that may be a better option for her if she has high income. Obviously we can't give advice on here, and not knowing the details would make it impossible for me to do anyway, but it might benefit her to see a bankruptcy lawyer to let them run some numbers for her so they can give her advice.
Also, if she is 62 and owns a home, she may qualify for a reverse mortgage, which is often a good way to free up money to help get rid of items like these.
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