So you want to get rid of your car?

Not everyone is enamored with that All-American love for the motorcar, treating the machine in the driveway like a pet or a member of the family.

Especially if it comes with a whopper monthly payment, or worse yet, periodically doesn’t run.

While it is nowhere as common as the alternative, a few bankruptcy clients want to know if filing a case can help them get rid of their problem vehicle. For a few folks, getting rid of burdensome car payments might even be the primary motivation for filing for bankruptcy in the first place.

There is only good news on this front: for car owners with loans outstanding, once a case is filed, a vehicle can be returned to the lender without penalty. And a good bankruptcy lawyer will insist that the lender arrange (and pay for) the towing of the vehicle. End of payment, end of problem.

Consumers who have gotten themselves in over their heads on leased vehicles can also take advantage of the bankruptcy laws, which may be especially helpful if a whopper end-of-term charge for mileage or damage is looming. There are technical differences in these cases — since the car isn’t owned by the consumer, the laws that allow debtors to terminate uncompleted “executory” contracts are invoked instead — but the result is the same; consumers willing to say goodbye to the car can say good by to the payments and penalties as well.


By Doug Beaton

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