I can’t even tell you how many stories I’ve heard about “wheels”. It makes me feel very sad when someone arrives at one of my Indiana bankruptcy law offices in desperation because the bus doesn’t go anywhere near their job and their car was just repossessed. Their children have doctor’s appointments they can’t get to, and they don’t live near a grocery or pharmacy. Obviously, folks who’ve had a car repossessed have other debt problems, too, but having a repo person come on to your property and take your car seems like the ultimate indignity.

For my blog readers, here’s the scoop on car repos… when a lender takes your car back, it’ll get auctioned. You’re given notice of where and when, and you get a chance to buy the car back. If you can’t, though, the car will get sold to someone else, probably for less than you owe on the loan, especially when the costs of repossessing, storing, and selling it are added. You’ll still end up owing the deficiency (with interest accumulating, of course).

What other choices are there? First, contacting the lender to try and lower the payments for as long as three months while you get back on your feet, or asking the lender to extend the term of the loan so payments will be lower than they’ve been. Then, filing bankruptcy will put a stop to collection efforts (that’s called the automatic stay – see Oh, Yes, You Can Stop Being Harassed!), giving you some time to work out a plan to possibly hold on to the car. In fact, if you file a Chapter 13 bankruptcy before the car is sold, the creditor will have to return the vehicle even if it’s already been repossessed. (A Chapter 13 will allow you to pay for the car over as long a period as 60 months. That, in most cases, will result in a lower interest rate.) In any event, a big part of the work I end up doing with clients who come to me in time is helping them keep their cars, especially when that makes the difference between their being able to work or not.

The absolutely most important message I need to get across in this blog post is that you need to address the problem before a payment is missed, when you see things going downhill. There will be a whole lot better chance that way of keeping you wheeling along.