How to deal with overwhelming car debt!
Quite often we hear from people who say: “I don’t have that much credit card debt, but my vehicle debt is killing me!” It’s not unusual for us to see folks who are paying $800 to $1000 per month or more for a vehicle and that doesn’t include the licensing costs. Worse yet, they are seriously ‘under water’ with the vehicle—this is vehicle financing lingo for, the person owes more than what the vehicle is worth. The worst situation we’ve seen is a couple of cases where about $80,000 was owed on vehicles that were worth $35,000.
So what’s the solution to this? The law in BC is actually pretty friendly to the consumer on this matter. If you stop making your payments on the vehicle, then the lender has to decide whether to ‘seize or sue’ the vehicle. The vast majority of the time, they’ll seize it, and once they do that, the debt associated with the vehicle stops. Why? If they don’t seize it, then they have to sue you. Think about it: if they sue you, you’ll might go bankrupt. Many of us would if we were suddenly hit with a $30,000 or higher debt. The lender in such a situation risk that they might get nothing or next to nothing. Seizing the vehicle provides the lender with the greatest means of recovering as much of the vehicle’s value as possible.
For our clients, this can be an ideal time to file a proposal to their creditors. The proposal will deal with any other debt besides the secured loan on the vehicle. Also, by filing the proposal, the secured lender is informed of the proposal and will understand that they really have no choice but to seize the vehicle if they want to realize any benefit from it. It gives our clients an additional level of assurance that the car or truck will be seized, and the debt will disappear. The proposal becomes a great opportunity for our clients to hit the financial ‘reset’ button, and deal with any debts, secured or unsecured, that aren’t affordable based on their income.
If you have vehicle debt that’s out of control, give us a call and we’ll help you sort out your options.
About the Author
Bob Hauck operates the 4 Pillars Kamloops, BC Debt Restructuring office. To contact him directly visit his website or call him directly at 250-434-4505.
