If you default on your car payment, typically the lender can repossess the vehicle, sell it at auction, and hold you responsible for the remaining balance due under the secured loan agreement. There are sometimes exceptions to the rule, of course, and in a recent case involving an Illinois man, a judge discharged the balance owed to an auto finance company based on the debtor’s unique circumstances.
As reported in the Wall Street Journal, the case involves on Illinois insurance salesman who took a part-time job as an Uber driver to make ends meet. Apparently he was encouraged by Uber to get a roomier vehicle who then allegedly referred him to a lender. After taking a loan for 40K, the driver declared bankruptcy less than a month later and the finance company came after him for the 10K difference remaining after they sold the car to a third party following repossession.
Although the lender argued that the loan contract doesn’t allow a borrower to cancel debt for a luxury item or service obtained less than 90 days before filing for bankruptcy, the judge ultimately sided with the debtor, stating that his purchase of the vehicle stemmed form the man’s genuine belief he could earn enough money through Uber to finance the debt and turn his overall financial situation around. Her opinion: “Luxury goods” doesn’t include items that a bankrupt person needs for their “support or maintenance.” Chalk one up for the debtor trying to find his way out of a difficult financial situation.
If you are struggling financially and would like to explore what options are available to you, contact the Law Offices of Charles E. Covey for help. Putting many years of experience to work, Charles has successfully helped thousands of clients with significant debt challenges. Whether you have questions regarding auto repossession, home foreclosure, credit card debt or creditor harassment, contact our offices for help.
Source: Wall Street Journal, Judge Cancels Loan Debt for Illinois Man Who Upgraded Cars for Uber, by Kat Stech, accessed July 22, 2016.
