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JoeLawyer, Attorney
Category: Bankruptcy Law
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Experience:  Attorney in the practice of Bankruptcy Law since 1996
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I am helping my mother in law get her finances in order as

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I am helping my mother in law get her finances in order as she is in a world of hurt. Her husband lost his job and was also hit with a judgement for not paying alimony to his previous wife. My mother in law has 2 cars in her name that she owes about $90,000 on and the cars are only worth about $50,000. She also has a boat in her name that she is trying to sell. she owes 130k on it and can probably sell it for 120k. She cant keep up with these 3 payments as it is over $2500 for all three. If she does a voluntary reposession, do they come after her for the difference and put a judgement against her. She lives in North Carolina. What would be the best way to get rid of these 2 cars and boat?

Terry L. :

Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.

Terry L. :

Yes, She would be responsible for any remaining balance owed on these things

Terry L. :

She can either work out a payment plan, or she could possibly discharge them thru bankruptcy.

Terry L. :

With a bankruptcy, it will come down to if she has any disposable monthly income to pay back debt or not.

Terry L. :

If she does, then she'd be looking at a chapter 13 repayment.

Terry L. :

If she is in 13, she can keep 1 or all of these, depending on the budget.

Terry L. :

She should meet with a local bankruptcy attorney to see her different options.

Terry L. :

She could either sell these, or let the bank take them and auction them off. (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.)

Terry L. :

Let me know if you have any questions.

Terry L. :

thanks

Terry L. :

Terry

Customer:

Thanks for the info. So basically, if she sells them then she will owe the lender the difference? 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? 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.

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.

Good luck,
Joe

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JoeLawyer, Attorney
Category: Bankruptcy Law
Satisfied Customers: 767
Experience: Attorney in the practice of Bankruptcy Law since 1996
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