i am no longer able to pay my debts. two of my loans are through same finance company. one an auto loan and the other a personal loan. i am ...

Question

i am no longer able to pay my debts. two of my loans are through same finance company. one an auto loan and the other a personal loan. i am continuing to pay the auto loan but not the personal loan. the auto is not being held under the personal loan if i dont pay it. can they mess with my auto payment and put it towards the personal loan and try to take the auto back saying i didnt pay it? i send a check stating on it auto loan with account number on it.

Answer

They could potentially do this and it is a mess to clean up. I strongly suggest you consult with a debt collection defense or bankruptcy attorney to discuss all available options.

Answer

Maybe - depends on if there is what is called a "cross-collateralization" clause in there. These are more common with credit unions. The way it works is that if you have an auto loan and personal loan and default on the personal loan the lender can also deem this a default on the auto loan and repo the car.

I agree with Attorney Love. You need to sit down with an attorney and have the loan documents for the personal and auto loan reviewed. If there is no cross-collateralization clause, then stay current on the auto loan and let the other default if you cannot afford to pay. Or, depending on your circumstances, it might be a good idea to file for bankruptcy. You should have at least $10,000 in dischargeable debt to make bankruptcy worthwhile. If you are leaning towards bankruptcy, many bankruptcy attorneys give free consults. I would take advantage of that to see if bankruptcy is right for you.

If you are leaning towards a non-bankruptcy solution, I would be happy to review your documents and give more specific advice for a reasonable fee. Please contact me at [email protected]/* */ if interested.