Legal Question in Credit and Debt Law in Missouri
Vehicle surrender
I warned my daughter in 12-05, do not buy a new to you car. She's a single mother , full time worker, full time college student and 21 years old.She felt she had to have a 2005 Pontiac g6 and of course someone loaned her the money. I am not on the title. Now she can't afford the payments and wants to sell her car for whatever she can get. A caveat here, I bought her an 02 Mitsubishi in o4 and still have it and owe about 2 grand on it. Her bank says to sell the Pontiac and what she doesn't recoup she can put on a new loan with the balance of the Mitsubishi.Question, should she do this or can she voluntarily surrender the Pontiac and be void of further financial responsibility on that vehicle?I'm going to show her this note and your response so any advice to her will be appreciated, at least by me.Thank you.
1 Answer from Attorneys
Re: Vehicle surrender
In a word, no.
Car loan debt is what is called "recourse" debt. In other words, after the bank repos the car and sells it for a commercially reasonable sum, whatever amount is left is a deficiency balance. Several years ago a client of mine had a Grand Caravan repossessed and after the sale of the vehicle there was $1,800 left. The bank pursued him relentlessly for that $1,800. In the end he wound up paying $1100 and the bank took the money and ran.
Here the bank wants to add the money to the other note because you are liable on that note. If you allow them to do that, you become liable for the deficiency amount on the G6. This is not a good thing for you.
You do not have to agree to use the collateral value of the Mitsu to work this out. Instead, you can insist that your daughter turn over the G6 and whatever amount is left over, she simply has a personal obligation. The bank can demand the amount in full, and they can even go get a "deficiency judgment" against her, but they are unlikely to do that if she makes regular payments.
Your daughter should consider getting an opinion from a lawyer. I also applaud you for not bailing out your daughter. The only way to escape the situation where you've overextended, and I know this from personal experience, is to do the hard work it takes to dig yourself out of the hole. Congratulations on being a good parent.
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