why would a car repo sounds WORST than bank repo the house?
iAMgoD asked:
or short sell the house? I can’t afford my house anymore & thinking of letting the bank take away. Also thinking of the car too, but seem like car repo is worst since they’ll garnish your wages & take you to court.
December 20th, 2009 at 8:00 am
The house mortgage limits your liability to repay to giving up the house, but there is no such limit on your car purchase.
December 23rd, 2009 at 5:58 am
Same with the house, dude.
You cannot escape the debt unless they can sell the house (or car) for at least the amount due, or they agree to a short sale. Technically, the car loan people could agree to a short sale, but they never do. The difference is both the amount of money involved and the ability to move the property.
Bankruptcy is the only other way to erase debt for good.
December 24th, 2009 at 8:39 am
The primary mortgage on a property is usually a non-recourse debt. And, some states are non-recourse debt states, by law. This is where a lender who forecloses on a home owner cannot go after other assets, including wage garnishment, for repayment of the loan. They just seize the property and sell it, either at auction or on the open market, to cover the amount owed. And, they usually end up taking a loss.
With a short sale, the lender approves a sale of the property for less than the home owner owes. They then forgive the rest of the debt. This is generally better for the lender, since the foreclosure process is a very expensive and complicated process for them. If they know they’re going to take a loss, they would rather just have the home owner sell the property and give them whatever the seller can get for it, instead of going through the foreclosure process.
But, when you borrow money on something like a car, this is usually a recourse debt, where the lender can take you to court to get a judgment against you, where you may be required to liquidate other assets or even have your wages garnished.