I cannot pay this loan. Should I file for bankruptcy?
Q. I co-signed a loan for my son seven years ago and unfortunately I cannot pay it and neither can he. It got worse after my divorce. Should I file for bankruptcy?
A. We are sorry to hear about your divorce.
As you know, as a co-signer on the loan, you are responsible for the loan, just like your son.
Sometimes, bankruptcy is the best choice to help people start over and get back on their feet financially, said Karra Kingston, a bankruptcy lawyer in Union City.
She said many people who have auto loans they can’t pay off assume they can just return the car and the rental or finance company won’t hold them accountable. Sadly, that’s not the case, she said.
“When people voluntarily repossess the vehicle, the automaker will try to sell the car,” Kingston said. “However, any amount that does not cover your unpaid loan can still be collected on.
Most of the time, voluntary repossessions are large loans and most people can’t afford to pay off that debt, she said. If you have a voluntary repossession or owe a dealer a large amount outstanding, you may be better off considering filing for bankruptcy, she said.
“Many New Jersey bankruptcy attorneys offer free consultations that you can take advantage of to see if this would be your best route,” she said. “Bankruptcy is a tool to help people restart and get back on your feet.
Email your questions to Ask@NJMoneyHelp.com.
Karin Price Mueller writes on Bamboo column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Register for NJMoneyHelp.com‘s weekly electronic newsletter.