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I Did a Voluntary Repo

Question: I had to do a voluntary repossession because my car payments were too high and because the car was a “lemon” and needed serious repairs. I bought the German car because I was making more money than I ever did and I thought I’d keep making that kind of money forever. I got a job selling software and the money was great, and I was getting a big bonus on top of it.

Then my company got sold to a bigger company and with that new management team there were a lot of problems and the division I was in started to lose market share. In about two years my salary was cut in half and then I got laid-off. I couldn’t find another job because I was suspected of embezzling money and I was blacklisted in the industry. I wouldn’t call it embezzlement exactly, but I did have some questionable expenses.

So I couldn’t afford my lifestyle and my wife loves to spend money and show off to her friends, who are mostly divorced. She even got expensive plastic surgery that I’m still paying for. She went to a doctor in Atlanta who is really expensive and she got three procedures done.

Now the company that I did the voluntary repo with said they’re going to sue me unless I pay almost $30,000. That kind of money I can’t afford. I need to scale back big time.

I admit it’s not my first voluntary repo because I did one about 6 years ago on a Corvette and BMW. Can I eliminate the debt from the voluntary repo if I file bankruptcy?

T.S. in Johns Creek, Georgia

Answer: Many people have been in the same situation that you describe. They have a car that they no longer want, or perhaps no longer can afford, or the vehicle is simply in need of major repairs and it makes no financial sense to spend a lot of money on it. We have helped many clients who have done a voluntary repo wipe out the debt associated with it.

When the purchaser of a car returns it to the seller, that is called a “voluntary repossession.” The seller then sells the car to another person or a car dealer. The seller will then bring a lawsuit against the person who returned the vehicle for the difference between what the car is eventually sold for and the amount of the loan.

For example, if you owe $20,000.00 on a car loan and you give it back to the seller (or the finance company or the dealer) and the seller sells it for $8,000.00, then the seller will sue you for the difference, which in this case is $12,000.00. Once they get a judgment from a court, they can do things like garnish your wages or bank account.

The good news is the debt can be eliminated by filing for bankruptcy under chapter 7 or chapter 13.

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