Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com.
Dear To Her Credit,
I was recently evicted from my apartment and am over two
months late on my car payment. I will be three months late on the 24th of the
month.
My question is, if I make one payment on the 24th (to make it
still only two months behind), can they still repossess my car? I hate Nissan
and even hate that I got this car from them! -- Erin
Dear Erin,
Is there any chance you may be misdirecting your anger about
your financial crisis at Nissan? Unless your car is a real lemon, they seem to
be just the hapless finance company that wants you to pay what you said you
would. It's important to sort out what's bothering you so you can make the best
decisions based on facts, not emotion.
Unfortunately, one fact is that making a single payment when
you are almost three months behind may not save your car. Car owners don't have
the same legal protections that tenants do. After you missed a rent payment,
your landlord went through a lengthy process before he could evict you. Finance
companies with car loans
don't play by those rules.
Although the amount
of time you have, depending on the laws of your state and the terms of your
financing contract, lenders can generally repossess your car any time
you miss a payment.
Having already missed two payments, you're running out of time.
You could wake up any morning and find your car gone. Repo companies often work at night to
avoid confrontations; police officers say they often respond to calls about
"stolen" cars that have actually been repossessed while their owners were
sleeping. You must take action immediately to avoid losing your car.
Here's
what to do:
1. Decide if
you want to keep your car. If you really hate your Nissan or decide you can't
afford it, sell it and pay off your loan. With luck, you'll have enough left
over to buy an older car. Or, depending on where you live, you might be able to
get along without a car until your finances improve by taking public
transportation or catching rides with friends.
2. If you want
to keep your car, call the finance company immediately. Ask for a
temporary reprieve from full payments or make some other arrangements.If you have reduced income; for
example, if you're on unemployment benefits, they may work out a longer payment
period with lower payments. Or they may tack the missed payments on to the end
of your loan. Get any change to your contract in writing.
3. Look for
a loan with a lower interest rate. If you financed your car through the
dealership, you may not have gotten the best deal in town. Try refinancing
through your bank or credit union. I don't recommend transferring the balance
to a credit card -- there's too great a chance of the interest rate going up.
While
you're working something out, make it harder for the repo man to find and take
your car. You can't stop them from repossessing your car forever -- eventually
the finance company will use legal means to make you give it up. But for the
short time you're working out financing or trying to sell your car, you can
certainly slow them down. In most states, companies can't break into a garage
or take your car from the driveway if you or someone else tries to stop them. Keep
your car in a locked garage or at a friend's house. Don't try just parking your car
two or three blocks away on the street -- they're wise to that.
The
best way to get out of a financial mess is to stop blaming Nissan or other
creditors and look for long-term solutions -- a better job, a lower cost of
living or other positive changes. As you look for solutions, remember many
people have been in similar situations and have gotten through it, and you
will, too. Take care.
Sally Herigstad answers questions about credit every week for CreditCards.com. Herigstad is a certified public accountant, author and speaker. She also writes regularly for MSN Money, Interest.com, Bankrate.com and RedPlum.com, and has been a guest on Martha Stewart radio and other programs. You can read more about personal finance and download free budgeting worksheets at her website: www.sallyherigstad.com
To Her Credit answers a question about a debt or credit issue from a CreditCards.com reader each week.
Send your question to Sally.
Published: June 11, 2010
Three most recent To Her Credit stories:
Should one spouse take on full debt load? – A married couple with joint card debt wants to transfer the balance to a lower rate card. Should the better credit score spouse take on the burden alone? ...
Can you use dad's credit card when he's ill? – An adult child is taking care of her dying father and wonders about the legality of using his plastic to pay for bills and medical expenses ...
Did you like this story? Then sign up for CreditCards.com’s weekly e-newsletter for the latest news, advice, articles and tips. It's FREE. Once a week you will receive the top credit card industry news in your inbox. Sign up now!
