Losing a car from repossession is a major concern for someone who is experiencing financial difficulty. If you do not continue to make regular monthly payments, the lender often exercises his rights and takes back the collateral, sometimes with no warning.

Once the car is gone, doesn’t that mean the debt is also gone? No. After the repossession, you may actually owe more. While the loan balance would be decreased by the selling price of the car at auction, you are now liable for all the collection costs. These costs include attorney’s fees, towing, storage, auction expense, late penalties and interest.

Sometimes, a vehicle that has a $10,000 car loan balance will only sell for $2,500 at auction. This is not an unusual and if you were in this situation, you would owe the difference of $7,500 as well as the collection costs. Basically, you end up making payments on a car you no longer own.

It is very important to do something immediately if you are falling behind on car payments and repossession may occur. Once you file your bankruptcy papers with the court, repossession will stop instantly as well as all other collection activities. The Suburban Law Group will advise whether or not bankruptcy is the best solution for your financial difficulties, or if there are other options available.