My girlfriend lost a good paying job, and while she was between
jobs her car went to collections because she couldn't afford the
payments.
She is working again but her income is now half of what it once was!
She is making her monthly payments but "just barely." The car is also
aging and is starting to require regular costly repairs. She simply
cannot afford the car and she is going further and further into debt
simply because of the car.
There are a few interesting problems in this particular case:
1.) The collection agency has agreed to settle for a fixed sum that is
thousands of dollars less than what is owed. However, no banks will
give my girlfriend a loan because she is "in collections." In other
words, she cannot take advantage of an opportunity to save thousands of
dollars. Are there any agencies/programs that would give her a loan so
she could buy the car out, save some money, and allow her to lower her
monthly payments?
2.) She thought of selling the car but she owes more than what it is
worth. She wouldn't care if she sold the car and had to continue making
monthly payments until she was out of debt, but the car needs some
costly repairs BEFORE she could ever sell it. For this reason, she is
thinking it may be best to let them simply repossess that car. What
happens if the car is repossessed? Does the collection agency simply
auction the car off and come after her for the remaining balance?
3.) To make things worse, her current job requires that she has a car.
Therefore, getting rid of the car means she will either have to quit her
job or be fired. Are there any legal ramifications for quitting a job
while filing for bankrupcy?
4.) Finally, I understand that because I didn't sign for the car the
collection agency can not hold me responsible for the debt (my
girlfriend bought the car before we ever moved in together). However,
since we are living commonlaw, can the collection agency come after part
of my income since our two individual incomes are really a "household
income"? I am worried they will try to take part of my wage for any of
my girlfriend's remaining car debt. Does it make a difference that my
only income is a scholarship?
The car debt is really the only problem. She doesn't really have any
other debts, has no credit cards, and no other loans. The ENTIRE
problem centres around her dramatic income decrease (50% per year). Is
bankrupcy the answer??
We need to do something as this is really taking a toll on our finances,
health, and relationship. Even our sense of self-worth (being
responsible adults) is really taking a beating.
Thanks for any help, this is a great website.
