Need Help - LoanStuck

[poordecisiondummy]

Hello! I'm new here, but I need some major help. 

I got into credit card problems over a decade ago.  About three years ago I started to received calls from debt collectors warning me that I had to pay the full $6000 amount immediately or I would be in trouble with the law and/or sent to jail.  I didn't know what I should do so when I was offered a consolidation loan from Springleaf to keep me from jail, I took it.  I didn't know any better.

Three years later and I'm still stuck.  I pay $300 to $500 a month but the interest rate is so high that the balance has only decreased to around $5300.  The Springleaf loan has my car as collateral (a 2009 Kia which is no longer worth the amount of the loan). This debt is crippling me and preventing me from doing anything else with my life.  Every dime I earn goes to cover rent and this debt making it difficult to afford food sometimes.

I'm trying to find possible solutions, but I'm not sure where to start.  Should I file for bankruptcy?  Would that even get me out from under this debt?  Would allowing them to repossess my car erase this debt or would I still be liable for it?  If I just stop paying it will they still send me to court?  What options do I have in the state of Georgia?  

Thanks for any help you can offer. 

[CCRP626]

10 minutes ago, poordecisiondummy said:

I would be in trouble with the law and/or sent to jail.

too bad you didn't post here back then, that would have been an FDCPA claim. If the car is worth less than the debt, you'd owe the difference. None of this sends you to jail.

Do you have arbitration in the paperwork?

[poordecisiondummy]

Thanks for getting back so quick! Believe me, I wish I could go back and slap some sense into myself.  I'm sorry if I sound dumb, but do you mean the arbitrations paperwork for the original debt? Or the arbitration part of the Springleaf loan contract?  I do have the loan contract.

[CCRP626]

@poordecisiondummy right now what debts do you have, just the Springleaf loan? Does it have private arbitration in the agreement? If you got rid of this Kia, do you have other transportation options? Have you contacted the lender about turning the keys in or adjusting the payments down? Do you have a good repayment history? One possibility is quit paying and turn in the car. They'll sell it at auction and what's not covered look to you for making up the deficiency which down the road could be a lawsuit. In the meantime while not paying, try to set aside at least some of what you're paying for this currently each month. That could go towards settling at a discount or they may drop this if you go for arbitration if that's in the agreement. You can also use that money towards a NACA attorney.

How much is the interest rate on the loan?

With just one debt I wouldn't consider bankruptcy  especially if they just put you on a repayment plan. If turning in the car and bankruptcy looks like something you're going to do- If you surrender the vehicle within your bankruptcy a repossession does not appear on your credit, and you can still eliminate the remaining debt within your bankruptcy. If you are planning to file bankruptcy and have already voluntarily surrendered your vehicle, be sure you discuss the voluntary surrender with your attorney so the deficiency balance can be properly taken care of.

When you file Chapter 13 bankruptcy in Georgia, your creditor is barred from repossessing your car.

You may have a legal defense against a deficiency judgment if, for example, your creditor breached the peace when seizing the vehicle, failed to sell the car in a commercially reasonable manner, or waited too long before suing you. An attorney will be able to tell you whether you have grounds to contest a deficiency judgment. Any resale of a repossessed vehicle must be conducted in a “commercially reasonable manner.” Your creditor doesn’t have to get the highest possible price for the vehicle — or even a good price. But a resale price that is below fair market value may indicate that the sale was not commercially reasonable. “Commercially reasonable” may depend on the standard sales practices in your area. A creditor’s failure to resell your car in a commercially reasonable manner may give you a claim against that creditor for damages or a defense against a deficiency judgment.

@fisthardcheese @Clydesmom @NormInGeorgia are experienced posters who know Georgia and hopefully they'll pop in to look over this.

[Clydesmom]

3 hours ago, poordecisiondummy said:

I'm sorry if I sound dumb, but do you mean the arbitrations paperwork for the original debt? Or the arbitration part of the Springleaf loan contract?  I do have the loan contract.

Arbitration won't help you on the Springleaf contract.  It is a loan with the car as collateral and they would have every legal right to refuse arbitration and repossess the vehicle.

BEFORE you make any decisions you really should do a consult with a bankruptcy attorney to discuss ALL your options.  Most do the first consult for free.  Even if you voluntarily surrender the car it will still go on your credit report as a repossession.  If you declare BK after surrendering it then it gets listed as a repo but included in BK.  DO NOT count on the repossession to be anything but peaceful.  In GA 90-95% of the time they grab the car during the night while you are sleeping and it is simply gone when you get up which is VERY legal.  You do not want this to happen because it will add towing, storage and other fees to the debt owed.  As for the deficiency balance the car will be sold at auction and the chances of a valid repo that is auctioned off being sold for retail are slim to none.  The chances of making anything stick that they didn't sell it for "fair market value" when you know the car isn't worth blue book is ZERO as well.  It is common knowledge that repo cars at auction do not go for retail unless it is less than 5 years old and a top 10 vehicle in good shape.

Rather than turning it in and being left with a deficiency balance it is better to review your options and choose the one with the best outcome for you.  

 

[CCRP626]

I don't know if it will do any good but contacting Springleaf or someone like Lendingtree to see about refinancing this might be an option to get the payments manageable.