Q: I currently have a loan with a lien on my car. I’m financially able to make the payments for the loan however,
The car needs $8000+ in repairs mechanically and the car is not worth that so it is pointless to dump money into it. I’m wondering if I can just surrender the car and continue to make payments on the loan or will there be serious issues with that. Can they take it and sell it and allow me to make the payments. Otherwise the car is just going to sit and collect dirt. I have not reached out to the company yet to ask about this yet
A:
Once a bankruptcy case is filed, the Code provides that you can tender the collateral to the secured lender in full satisfaction of the secured portion of its claim (there may be disputes about the value of the collateral).
Short of a bankruptcy filing, you can certainly offer the car to the secured lender, for a credit upon the loan balance, but the lender most probably would offer the vehicle for sale at auction, and apply any proceeds, less costs of sale, to the debt. It would be by agreement with your lender, and the lender may opt to refuse to accept the collateral if it is worthless (check your loan documents for clarification of this option).
Your best path is to speak with an experienced attorney in PA, who will have read your loan documents, to advise you of your options, and perhaps speak with your lender to negotiate some agreement.
Timothy Denison agrees with this answer
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