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How do you default on a loan?

I realize this answer should be obvious, but I've never defaulted on anything before and find myself in a position where doing so is the best option right now. Are there any steps I need to take?
Background: It is a travel trailer and is worth half of what I still owe on it. I bought it before the economy went to hell and used it as a residence. I was assured that I'd be able to have the dealership sell it for me on consignment or something once I was finished. The dealership closed. It was a bad decision on my part. Anyway, it has got to go. You can buy a new one for less than what I owe on this. And we need a car that can fit all our children, so the payment for the trailer is basically wasted money that we could use towards something we need. I've always had good credit, so this is hard for me to do to myself. Any constructive advice welcome. Thanx.

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Anonymous

Asked by Anonymous at 3:00 PM on Nov. 4, 2009 in Money & Work

Answers (12)
  • First to default on a loan you just stop making payment. but you really do not want to do that. because it will ruin your credit. they will come and take your trailer and then your credit will be bad.


    Try selling it yourself. Or trade it in on one you want. Like people do with cars.

    louise2

    Answer by louise2 at 3:09 PM on Nov. 4, 2009

  • Try using it as a trade for a vehicle or put it on Craigslist in your area.

    If you let the finance company reposess it. You'll still end up paying more for it than you owe + end up with bad credit.

    If necessary file bankruptcy on it and other items.

    Good Luck
    Anonymous

    Answer by Anonymous at 3:12 PM on Nov. 4, 2009

  • Constructive advice! I realize they will take it, as this is the point. I want them to take it! And I realize it will be a bad mark on my credit for 7 years. At 25 yrs old I had a credit score of 720 so it is not an easy decision to make my credit go bad. I cannot sell something I do not own and I am not going to get a loan for the amount I owe on it and then be able to sell it for anywhere near what I would need to. I have followed the prices of new and used travel trailers and they are significantly cheaper than they were 3 years ago.
    Anonymous

    Answer by Anonymous at 3:14 PM on Nov. 4, 2009

  • "You'll still end up paying more for it than you owe"

    Now this is helpful. What do you mean I'll pay more than I owe? I owe $18,000 on it. Will it cost me that much to default on the loan?
    Anonymous

    Answer by Anonymous at 3:15 PM on Nov. 4, 2009

  • What do you mean," you can not sell something you do not own"? This trailer is not in your name?
    louise2

    Answer by louise2 at 3:20 PM on Nov. 4, 2009

  • I mean the bank has the pink slip.
    Anonymous

    Answer by Anonymous at 3:22 PM on Nov. 4, 2009

  • So the loan is in your name. You can sell it. The new owners would just take over the payments.
    But if you just do not care about your credit. Just stop making payments.
    louise2

    Answer by louise2 at 3:26 PM on Nov. 4, 2009

  • Oh, I didn't know that. I've never done that before. Though no one in their right mind would take over an $18,000 loan for a 2003 travel trailer when they could buy a 2008 for just under $10,000. Now is the time to buy one, not a few years ago. LOL. I have to laugh about it otherwise it will just raise my blood pressure.
    Anonymous

    Answer by Anonymous at 3:35 PM on Nov. 4, 2009

  • "You'll still end up paying more for it than you owe"
    I think what she meant is that if you let them repo it then they will sell it... so say you owe $18,000 on it, but it's only worth $9000 when they repo it they will sell it to the highest bidder who might only pay $6000 for it. So you end up losing more money. So it is probably better that you try and sell it and get a loan for the difference, but of course it's up to you.

    They will come after you for whatever the difference is though. And unless you file for bankruptcy or make a deal with them, you'll probably have to pay it.
    Anonymous

    Answer by Anonymous at 4:59 PM on Nov. 4, 2009

  • Having had a repo happen here is what I did not know that I do now. When they take it, it goes to auction. If they do not get what you owe on it, YOU HAVE TO PAY THE BALANCE. So you owe 18k on it, you can get a new one for 10k, so I am guessing its worth about 8k. at auction they will probobly get 4-6k for it, so you will still owe them 12-14k on it and they will want it RIGHT NOW. If you cannot pay it goes to collections and then you have not just the repo, but also the collections agency on your credit. If you don't work with them, or they don't like your offer they take you to court (no warning) and get an order to debit your checking account (they got $140 a week from us). It really might be better to declare bankruptcy or see what else you can do about it.
    auroura

    Answer by auroura at 5:26 PM on Nov. 4, 2009

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