CAR DIED DO PAYMENTS LIVE

We have a situation where we can trade a non-operative car in and the dealer will pay up to $1500 toward the payoff, but the finance company will not budge on their payoff of $3300. 
 
We had paid over $20,000 and we do owe two payment totally $800 from 2002. At that time our payments had been late because of job loss.  We tried in late 2002 to pay off the car with $800 and we tried again on two other occasions to negotiate with the finance company. They have been wanting us to restart payments on a figure of $3300.00.
 
The credit report says the amount owed is $1585.00.  We never received any notice of additional fees or charges from this company. We don't know how to handle this problem.  We need a second car and cannot afford to pay on a car which is not running. Should we do a voluntary repo?
 
BV

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Dear BV,

You appear to be laboring under the popular misconception that your ability (or inability) to pay negates obligation. It does not. Please get this firmly in your mind to avoid more serious consequences in the future.

This debt is going to be a thorn in your financial side if not resolved. It is a fair bet that penalties and interest are set forth in the original contact. Check the document and determine the total of principal, interest and penalties. If the $3300.00 is the actual amount, you are bound by that written agreement.

The fact that you attempted to negotiate a lower payoff in 2002, but withheld any payment, is not likely to curry favor in the event they take you to court. The amount on the credit report is virtually irrelevant. Credit reports are replete with errors; they don't trump signed documents. It is fair and accurate for them to report the past due amounts and payment in arrears since 2002.

The fact that the car is not running brings no weight, that I can see, to your position. If you can find in the original contract a statement obligating the lender to send timely notices - that could help. If there are laws requiring such notice and they are in violation that could be a negotiating point.

If you explore the possibilities listed and come up empty, you should bite the bullet. If you had made your best effort to pay what you could, when you could, perhaps the finance company would have created a loan that included the purchase price of a new vehicle and the amount remaining on the old one. You can still ask but I doubt it.

Best advice, negotiate in good faith, but you have to eat this, consider it a not too costly lesson in managing your finances.

Do not allow a voluntary repo of the car. Voluntary repossession does NOT eliminate debt. In fact it can make it worse. Read my other columns.

Learn from your mistakes; better yet, learn from mine.

Everybody's Uncle