which is the lesser of 2 evils, a car repossession or filing for bankruptcy?

Question

which is more forgiving on your credit report and easier to overcome? please be specific and if you have experience to relate please share it.
my brother has a car he can no longer make payments on. the bank said if he sells it they won't give the title over until the entire balance is paid off (which is ALOT), so how is he supposed to sell it? they also said that he must be paying on the car for at least 1 year before they will even consider granting him an extension to sell it. he's been paying on it for 6 months now......i am trying to help my younger brother figure out what to do........we have thought of everything and it seems he has one of 2 choices......which is the lesser of 2 evils?

Answer 1

It really depends. I do know that he can do a voluntary reposession. The bank will take it back, it will go to auction, then he will have to pay the remaining balance. I knew a couple people who did this. It did not go on their credit b/c it was voluntarily repo'd then the debt against them was paid based on an agreed upon schedule, so they both never got into bad standing with the bank.

Personally, I would list the vehicle for sale. Lets say he owes $20g on the car. Then lets say he sells it for $15g. That is a $5g loss. So if he had a credit card or could take out an unsecured private loan then his problems would be solved.

Another possibilty is trading down. If he has an expensive vehicle, he can take it to the car dealership, get an old cheap car, the dealership will take the new car, he'll still be stuck with some debt from the expensive car, but at least the payment would go down some. And, it would probably be better than repo-ing or bankruptcy.

Answer 2

Neither one is good to have on your credit; however, if this is a no win situation, put ALL debts into bankruptcy. The laws changed and he will have to go to credit counseling to see if there is any way he can pay - the laws are much more strict.

A bankruptcy, if it is allowed, will be on his credit report for 7 years. A reposession - I see ads, (I'm not an expert), but you do see the ads, that repo's aren't a problem. I think those suck you down further.

He should really do whatever he has to do to make the payments until he can get someone to take over the payments or he can refinance to something he can really afford.

This happens because the "car salesman", stretches someone beyond their limit, and then it is a problem. Happens way too often, and I think something should be done about it.

Answer 3

If he can increase his income to make his car payments on-time, that is the best solution.

If he is sure that he will not be able to keep it current, then he may wish to find other alternatives.

Bankruptcy is normally recommended for someonw in a similar situation who has substantially more debt in addition to the car. If the car is the only real debt problem, then he should focus on other options.

Repossession is something that should be avoided at all costs. If he can work a second job, work overtime or get a higher paying primary job, that would be preferred. Even an extra $60 a week can give him close to $250 a month to put toward the car payment. If you want to know about the pitfalls of repossession before going down that path, I recommend the following article.

Answer 4

summer's answer is on track. You don't want to consider bankruptcy unless you have other debts. And that depends on if he even qualifies for Chapter 7. He will still lose the truck, plus his credit will be terrible.

Note that bankruptcy is much worse then repo, but not much.

Have you considered finding someone who is interested in the car, and have them take over payments? They could be added as a 3rd party to the title until it's been paid off. (not sure on this though....)

Answer 5

lesser of evils would be repossession of your car. Filing bankruptcy is something you do not want to do especially if you want to one day be a home owner. Bankruptcy is not something you can erase from your credit report easily, lenders grade you by your fico score and how well you manange your debts, when they see bankruptcy on your record it's telling them you are not capable of owning a home and repaying debts. they will give you very hard time to borrow large amount of money in the future, with repossessions, this can be easily remove after stablishing your credit by applying more credit cards and paying them off satisfactory. couple of months is all it take to remove repo from credit report, bankruptcy takes up to 10 years. don;t do it! I'm a license mortgage Broker in hawaii. trust me.

Answer 6

well if the only debt is the car than, repo is best...if there is the car and other debt over 8k, than chapter 7 bankrupcy is the way to go.they are equally damaging except bankrupcy stays on credit now for 10 yrs. if you go repo, it will be hard to finance another car.

Answer 7

filing bankruptcy looks much better than a reposession. a lot of people don't know but if you can't pay for your car, you can take it back to the dealer or creditor and tell them before they reposess it, then you don't have to do either!

Answer 8

car repo would be better

Answer 9

i wish i knew

Answer 10

PEACE__________NEVER FINANCE WITH MONEY ON WHICH INTEREST IS REQUIRED. THIS BELOW IS PASTED TEXT:
#######################################################
in the name of allah

TEXTBOOK MODE

hypothetically,
>>>>>>>borrower borrows money with no interest condition, this amount

withdrawn from buying commodities and turned into produced goods which

can be disposed by means of the lenders spending the money returned.

if the lenders have lended on condition that interest be paid, then to

pay this the concern decreases employee pay, or extract more labour

from them to produce more, or decrease equipment maintainanance or

extract more labour from them. if the lenders spend all of the

interest amount on the concern's commodities(after spending their

returned money on the concern's commodities excluding interest) then

all commodities would be sold, the lenders getting more commodities,

while employees getting lesser commodities(after spending all their

wages and salaries) or having exerted more labour, or equipment

maintainance decreased or having exerted more. if any of the employees

hold from spending money except interest money that they may have,

this will result in so much of goods being unsold, which will either

perish or be sold at a decreased price(if it dosent decrease then

there will be no money except the withheld amount to purchase them),

thereby in the next work session: resulting in the decrease of their

pay, or extraction of greater labour, or decrease in equipment

maintainance, or extraction of more labour from equipment. if the

lenders withhold interest money from spending(after spending their

returned principal on commodities) then goods worth that money will

remain unsold resulting in perish and price decrease(if it dosent

decrease then there will be no money except interest to purchase

them). after this if they spend it(after the spending of amount gotten

after the withholding, even by those who have not withheld), then all

goods would be sold and so much it being unspent in the hands of

employees, not perishable and used by rise in prices(if used).

after introduction of interest based funds in a country, jobs may be

created(after buisness proliferation) and the lender takes interest

from the other factors of production, with them toiling so much extra

or gaining so much less. meanwhile perished unsold goods head the firm

toward bankruptcy(as for unspent money, them being entirely being

spent by increase in prices). as perished goods leave, remuneration

and work and consumption and production fall. it can also be discerned

that this depression caused here does not turn into boom on its own

(though the 'boom' does.)



NOTE: higher extraction of labour and higher qualification demands for

employees and employee dumping or switching : they may be taken

together.
lower equipment expenditure and higher advertising cost and

bankruptcy : they may be taken to gether.
money being unspent and formation of luxury industries : they

may be taken together <<<<<<<

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STORY MODE

there is a worker who produces his goods with his own machine. buying

all his goods with all his money. he uses the purchase money to buy

raw material and repeats. a person comes and it is agreed that he

gives the first money, to return a greater amount after sale. the

labourer buys more of raw material, and works harder, produces more

goods and cannot buy all his goods because he has to give some of the

money to the lender. some of those goods perish and he manages to

consume the rest by decresing its price,stuffing himself. the interest

is given and the principal to be paid later. the worker is unable to

buy the same amount of raw material as after the loan, managing to

buying lesser than that. he then produces goods, working hard but less

harder than after the loan taking, and produces lesser goods than

after the loan taking, but cannot buy all his goods because he has to

give money to the lender which he does and he is left with a lesser

amount to purchase raw material with. the goods he cannot buy have the

same fate, and the labourer stuffs himself but eats lesser than the

previous stuffing. whenever the lender spent the interest of a

production session on the goods of the session, then all the session's

goods were sold and the worker had te same previous consumption amount

and was left with the amount of money he had in the beginning of the

session to purchase raw material with. whenever the lender bought more

than a session's interest, the worker couldnt spend all the money(on

his goods), so he spent it all by increasing the price.(and money

dosent perish). and his consumption was lesser than the previous

session and he was left with more amount than what he had at the

beginning of the session. time passed, the worker toiling to produce

more goods, the price falling and goods dying when the lender witheld

interest from spending, the price staying same and all session goods

sold and when the lender spent the session interest, surplus money and

price rising when the lender spent more than the session's interest(on

the session's goods). whenever goods died the worker could not recover

its price. in this way, over time the volume of goods fell until the

worker did not have any sale money left after paying interest so he

could not eat, did not have work(which like his eating, eventually

decreased to zero). he then couldnt give the lender his interest after

the next empty session who then asks for the principal which he fails

to give.

the lender confiscates him and his machine.