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HomeBankruptcyI can’t pay this loan. Should I file for bankruptcy?

I can’t pay this loan. Should I file for bankruptcy?

Q. I cosigned on a loan for my son seven years ago and unfortunately, l can’t pay it nor can he. It went downhill after my divorce. Should I file for bankruptcy?

— Poor

A. We’re sorry to hear about your divorce.

As you know, as a cosigner on the loan, you’re on the hook for the loan, just like your son is.

Sometimes, bankruptcy is the best choice to help people start over and get back on their feet financially, said Karra Kingston, a bankruptcy attorney in Union City.

She said many people who have car loans that they can’t pay assume that they can simply turn the car back in and the lease or finance company won’t hold them liable. Unfortunately, that is not the case, she said.

“When people voluntarily repossess the vehicle, the car company will try and sell the car,” Kingston said. “However, any amount that doesn’t cover your outstanding loan can still be collected on.”

Most of the time, voluntary repossessions are large loans and most people can’t afford to repay that debt, she said. If you have a voluntary repossession or owe a large outstanding amount to a dealership, then it may be best to consider filing for bankruptcy, she said.

“Many New Jersey bankruptcy lawyers provide free consultations that you can take advantage of to see if that would be your best route,” she said. “Bankruptcy is a tool to help people start over and get back on their feet.”

Email your questions to Ask@NJMoneyHelp.com.

Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.

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