Can’t Afford Your Car? DO NOT, DO NOT, return the car to the dealership.

I have seen a lot of clients recently who have had to file bankruptcy because they turned their cars in to the dealership.  They expected that this it would be a solution to the problem of a car payment they could not afford.  Nope.  Big, big mistake.
Turning in a car to the dealership is, for legal purposes, exactly the same as a repossession.  The dealer goes through the same steps.  The dealer takes the car to auction and sells it — usually to themselves — for way less than the amount of the outstanding loan.
The remaining loan balance — known as a deficiency — is usually the subject of a lawsuit against the borrower.  Most of the time, the borrower does not bother to contest the lawsuit. (There are few legal defenses to the lawsuit on the deficiency anyway.)  The result is a judgment against the borrower, often for tens of thousands of dollars.
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