Question by ~*Live, Love and Blessed Be*~: Defaulting on car loans in NC?
My boyfriend has two loans, a car loan for $ 27k for a car worth about $ 8k, and an $ 11k personal loan that was taken out to pay off another car loan. After a series of heart attacks, he is now out of work and cannot afford to pay them. We need options, to start over, and begin rebuilding credit. What are our options? If he defaults, can they garnish his wages or seize future property? I understand this will negatively affect his credit, so I don’t need a billion affirmations about that. We’re simply looking for an option that will allow us to dig out of this hole.
Thanks for your response, CatDad.
He’s also a Disabled Veteran, after 20 years of honorable service in the Navy, with a service-connected disability of 30%. Don’t know if that opens any options.
Thanks for your response, CatDad.
He’s also a Disabled Veteran, after 20 years of honorable service in the Navy, with a service-connected disability of 30%. Don’t know if that opens any options.
He filed Chapter 7 after he left his wife in January of 2004. I’m not sure if you can file Chapter 7 again so soon. Again- we’re totally clueless when it comes to this. We’ve considered credit counseling, however, I’m not sure they’ll be able to help- not much help for $ 40,000 in auto loans. :/

Best answer:

Answer by CatDad
Update: You can file for Chapter 7 again in 8 years after you last filing…so next year in this case.
Disability payments are exempt from garnishment. If he does not own any property and he has no money, then he is “judgment proof.” This does not mean that he longer owes the money, what it means is that under his circumstances, his creditors would be legally powerless over him.
Still, if he defaults and has the repo, he’ll have really bad credit and there’s no much that can be done about that.
– Non profit “credit counseling” firms are primarily geared towards credit card debt. Car loans can never be a part of debt management plan, so don’t waste your time there.
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First, the good news, sounds like you need some: NC is one of only four states that does not allow wage garnishment over private loans/debts. If the car gets repo’d or if he defaults on the loan, if they take him to court they could freeze bank accounts, but if there’s no money then they’d get nothing. As stated above, wages cannot be garnished in NC. Personal belongings cannot be confiscated over private debts.
You should also consult a BK attorney to see if Chapter 7 might help.

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