Bankruptcy Is The Last Resort
Stacy allowed a car to be repossessed. The bank hasn't tried to collect it yet, and Stacy wants to know how she can settle this debt. Dave explains.
QUESTION: Stacy in Houston allowed a car to be repossessed. The bank hasn't tried to collect it yet, and Stacy wants to know how she can settle this debt. Dave explains.
ANSWER: Bankruptcy is always your absolute worst-case scenario. You don't get divorced until you've tried everything else, right? And you don't file bankruptcy until you've tried everything else. We're not anywhere near bankruptcy in this discussion, but it lays back there as your absolute worst-case scenario—a place you could go if you had to, I guess. It's not the solution, and it wasn't proposed as a solution. It was just one of the places a repo can take you.
It usually takes the bank about a year to get around to really putting some collections pressure on you. You generally can settle it for somewhere around $.20 or $.25 on the dollar. What that means is somewhere around $2,000 or $2,500 will settle this. You need to have a target in your financial game plan of saving up some money to have about $2,500 in about eight more months if you can.