Legal Question in Credit and Debt Law in New York

Re: Upside Down Auto Loan

Unfortunately, yes - you are obligated to pay the difference. This is now an unsecured debt just like a credit card. You should contact them and arrange a payment schedule that is comfortable in your budget. If it is a large amount that is causing you major financial problems along with other unsecured debt you could always file bankruptcy and have the debt wipd out. But this would only be appropriate if you have significant unsecured debts relative to your income. But call them and offer a payment schedule - perhaps offering an amount lower than what they are asking for. Call my office at (212) 745-1373 if you need help.

Re: Upside Down Auto Loan

You have to look at your leasing contract. It most likely contains a clause about your obligation to pay the difference between the value of the vehicle and the amount paid by the insurance company in the event of a loss. You should find out exactly how the difference in amount paid versus amount owed came about and negotiate a reduction...but you do have to pay for any actual and valid losses incurred by the lending institution (who, after all, paid for the vehicle). Good luck.