Illness making financial mess. Choice is pay on motorcycle, or credit cards. which to choose?

Question

We can only pay the credit card bills or the motorcycle payment. Would giving the motorcycle back to the bank be worse that the credit cards unpaid? I just don't know.

We do not use the motorcycle at all. My husband can no longer ride it, due to back condition. We have tried to sell it, no luck!
Thanks all

We were fine before illness and layoffs!

The motorcycle is a 2004 Goldwing 1800, and we owe $12,500 on it.

Answer 1

If it comes down to a choice, always pay secured debts before unsecured.

I agree with those that say sell the bike.
Even if you have to take a loss and make up the difference to the lender, it is "far" better than it being repo'd.

A repo is a repo whether you turn it in or they come and get it, the only difference is that you wouldn't have to end up paying the repo guy.

If you allow it to go to repo, they will sell it for far less than what it's worth
Throw the blue book out because it has no bearing on how much they sell it for.

An example of how a repo works:
You owe $6000 on the bike
They repo it and sell it for $2000 (more or less)
Now you have a deficiency of $4000
Repo fees can run up to $2000 (no not all of it goes to the repo man, most of it goes to the lender)
Split the difference on the repo fees and say $1000

Now you owe them $5000 - you are almost back up to what you originally owed them.
You don't pay and they sue, and win - now you add court costs and attorney fees (their atty and yours if you get one)

Now you owe more than what you origianlly owed and you don't even have the bike to show for it.

Having a repo or a judgment on your reports is worse than having a credit card charge off.

edit+++++
The amounts I used were for an example.
You can generally figure a vehicle/bike would sell at repo auto auction for somewhere between 25% to 50% of what you owe.
Of course you would have to factor in whether the vehicle was almost paid off, a new loan, a loan that was paid on for awhile, or if more is owed on the vehicle than what it is actually worth (that does happen with some who flip a previous loan onto the new loan)

If you turn it back in or allow them to pick it up, the best that you can hope for is that they fail to sell it in a legal manner, fail to provide you with all of the legally required notices, if they fail to provide the required notices in a reasonable amount of time (generally 2 years) than it would be considered an illegal repo and noncollectible.
Or that they ignore you for the next 4 years until it has passed the collecting SOL. Since repo's void the original contract they fall under the UCC for a 4 year collecting SOL.

I didn't mean for my post to sound harsh. I just wanted you to know what happens with a repo. Many people don't realize how expensive having a vehicle repo'd can be.

I realize that going through an illness is not only hard on a person and their family emotionally, but it can easily wipe out any savings a person/family may have - even with insurance.
Plus adding on a layoff is a double whammy.

I feel for you and your family and hope things straighten out soon, health wise and financially.

Answer 2

simplehe, I hate to say it, but either way you lose. Heres why. If you give the motorcycle back, you will be liable for any deficiency balance. If you dont pay the credit cards they will be calling you night and day, and wont take I cant pay for an answer, and eventually will drive you crazy. Notwithstanding, either way you go is going to hurt your credit big time. My suggestions is as follows:
1. Try posting your motorcycle on ebay. As foolish as that may sound, they definitely sell some merchandise. You may be fortunate enough to sell it for the balance or at least close. If it is close, call the lender and find out if they will accept the lesser amount and perhaps you can pay the remainder of the balance in easy payments you can afford.
2. Call the credit card companies and see if they will take lesser payments for a period of time. Although this is not the easiest path to take it may help you in your dilemma. If you can still make the minimum payments on the cards that is also an option because that will not show you 30 days late on your credit report. Try to refrain from using them however because eventually it also will catch up to you and you wont be able to pay them either.
3. Temporarily you may contact Consumer Credit Counselor and see if they will make arrangements for you and you just pay them. I suggest this only because lenders are more apt to do that because they are getting something and it does hold your credit up in pretty good standing. I would just suggest this on a temporary solution however.
It is not easy in your situation but act now. Dont wait until the phone calls begin if they havent already. The worst thing you can do is evade them and hope they will go away, because they wont. Dont let them repo that bike if at all possible. Repos hurt just as bad as anything.
Good luck with your problem, but if it handled properly I really feel you can get out of this mess and still salvage your credit.

Answer 3

I would continue paying on the motorcycle. If you have at least a $3,000 debt on the cards, it will take several years to pay it off with a minimum payment. And when that is done, you won't have much to show for it. The cycle will be yours and will provide transportation, the credit cards cannot do that. To help keeping a good credit standing, see if you can borrow more money from the bank that is financing the cycle. Pay off the cards and cut them up. That is your best bet. If you own your home, you can use it as collateral, or get a second mortgage on the home. Otherwise you can have a credit service make arrangements with the credit companies and pay the bare minimum. This too, will take many years.

Answer 4

I was going to say pay the motorcycle before the credit cards. You said you don't used the motorcycle, then SELL IT NOW. You said you can't sell it. That is not true. You may not be able to sell it for what you own, but you can sell it. The bank WILL set up payments for the difference between what is sells for and what you owe. If you gave it back to them, they would auction it for less than you can sell it for and have to accept payments on the difference. If you bring them an offer from a buyer, they would be dumb not to accept.

Answer 5

Talk to your creditors. They usually will allow you to make an interest only payment. You really don't want to have the motorcycle repo'd and the credit card companies are relentless. In the case of the motorcycle, you will only get credit for the resale value of the cycle and still be liable for the balance. I would definitely try contacting them.

P.S. Get the names of the people you contacted!!!

Answer 6

You may call the company that financed the cycle and ask about skipping a payment because if you let them reposses it, it goes against your credit. I would pay at least some on the credit card bills. You have obviously learned a good lesson. We should never over extend ourselves.

Answer 7

Sell the motorcycle and pay the credit cards.

Answer 8

I just had to file bankruptcy on credit cards. When I first went and had my consultation last fall, my lawyer told me to always pay all secured debt first (motorcycle) and pay unsecured last.

Plus my personal feelings were that if I kept current on my car loans and mortgage, what not, they would be more willing to let me reaffirm during my bankruptcy and all that.

So pay secured things first and utilities too
then pay unsecured such as credit cards last.

Answer 9

Speak to your creditors & explain your situation. Never just ignore them. See what you can work out with them. They really don't like to re-po anything. Your only other help is probably to file bankruptcy & let your attorney know what you want to keep (& pay for) & what you are willing to lose. You may be able to file a limited bamkruptcy (if they still have it). Good luck with whatever way you decide to go.

Answer 10

A voluntary repossession is not a good thing, but not as bad as defaulting on unsecured credit or an involuntary repo. Give the bike back to the creditor ASAP and keep trying to pay the credit cards, is my advice. If you endevour to pay the difference between what the creditor gets for the bike; and what you owe on it (as oppossed to bankruptcy), then that is a good thing in terms of your credit rating.