Q: Legal consequences of being unable to pay a debt consolidation company
My 80 year old family member has a loan being managed by a debt consolidation company and another personal loan which she put her car up for collateral on. She declared Chapter 7 finalized 1/2021. What will happen due to her not being able to pay these loans back?
A:
If your family member is unable to pay the loans managed by the debt consolidation company and the personal loan with her car as collateral, there are several potential consequences. It's crucial to understand that each loan might be treated differently based on the terms of the loan and the nature of the collateral.
For the debt being managed by the debt consolidation company, if payments are missed, this could lead to default on the loan. The company may pursue legal action to recover the owed amount, which could include wage garnishment or liens on property, depending on the terms of the agreement and state laws.
Regarding the personal loan with the car as collateral, if she fails to make payments, the lender has the right to repossess the car. This is because the car serves as security for the loan. The lender may sell the car to recover the owed amount, and if the sale does not cover the full debt, she might still be responsible for the remaining balance.
Given that your family member filed for Chapter 7 bankruptcy and it was finalized in 1/2021, it's important to review what debts were discharged and whether these loans were included. Bankruptcy can significantly affect creditors' rights to collect on debts. However, if these loans were acquired after the bankruptcy filing, they wouldn't be covered by the discharge.
It's advisable to consult with a legal professional who can review the specific details of the loans and the bankruptcy case. They can provide personalized advice on the best course of action, considering her financial situation and the legal implications. Remember, communication with lenders and seeking professional guidance early can often lead to more favorable outcomes in these situations.
Timothy Denison agrees with this answer
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