Getting Back on Track When You Have Auto Loan Debt

Many consumers borrow money to pay for automobiles. For Oak Park residents who rely on their vehicles for transportation to work in Chicago and the surrounding area, it can be extremely anxiety-inducing to fall behind on their car payments. However, many Americans simply do not have the requisite savings to pay for an emergency situation and to continue paying monthly bills. For instance, if a medical emergency arises, many consumers prioritize those payments over auto loan payments, especially if someone in the family is in need of life-saving treatment. Sometimes consumer bankruptcy may be the best option.
According to a recent post from the Consumer Financial Protection Bureau (CFPB), getting behind on your car payment does not always result in repossession. In some cases, filing for personal bankruptcy may allow you to discharge medical debt and to get back on track for paying off a car loan.
Reduce the Risk of Falling Further Behind on Your Car Payment
The CFPB post indicates that “about 6 million people were at least 90 days late on their auto loan payments near the end of 2016.” In other words, if you are having trouble making your car payment, you should know that many other Americans are facing a similar struggle. However, as the CFPB suggests, many consumers do not know that they may be able to get back on track simply by having a conversation with their lender. Here are some tips for catching up on your auto loan:
  • Contact your auto lender as soon as you know you will not be able to make an on-time payment. Rather than simply missing a payment and finding out about options after the fact, sometimes lenders can provide you with options so that you will not be charged a late fee and will not have to worry about a missed payment impact your credit score. In addition, by contacting your lender ahead of time, you will demonstrate that you are a responsible borrower and want to pay your loan.
  • Request a payment due date change. If you are having difficulty making your auto loan payment by a specific date, your lender may be able to change the due date. For instance, if you get paid on the 15th of the month but your auto loan is currently due on the 5th of the month, your lender may be able to change your due date so that it comes after you have received your paycheck and can make your payment. This way, you may be able to avoid late fees associated with a missed payment.
  • Discuss options for a payment plan. In some cases, auto lenders can work with borrowers to develop payment plans once they are behind on their loan. One option is to extend or postpone payments. By working out such a plan, borrowers can have lower monthly payments, but it can result in a lengthening of the loan and more money paid toward interest over time. However, if a lower monthly payment could mean that you can afford to pay the bill each month, such a payment plan could be very beneficial. Other payment plans include systems in which the borrower makes payments multiple times a month so that payments are spread out with paychecks. If you do work out a payment plan, it is important to understand the potential hidden costs and to discuss them with your lender. For instance, there may be fees associated with a payment plan. Be sure that you have your payment plan in writing.
  • Consider a different automobile. Did you purchase a car that is simply too expensive for your current income and other monthly bills? It might be a good idea to trade in the vehicle for a car that will cost you significantly less in the long run.
A Bankruptcy Lawyer in Oak Park Can Help
In many cases, it may be difficult or even impossible to get back on track with an auto loan. Filing for personal bankruptcy may be an answer. You should discuss your case with an Oak Park bankruptcy attorney as soon as possible. Contact the Emerson Law Firm for more information.
See Related Blog Posts:
How Does Bankruptcy Affect Child Support?

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