The coronavirus has brought about a rapid transformation of daily life in the United States, unprecedented both in scope and pace. This pandemic has bled into just about every aspect of the lives we knew.
As a Memphis TN debt attorney, I know that the symptoms are not just physical. Our financial health is at stake, too. Millions of Americans suddenly lost their jobs. Practically overnight, newly unemployed people had to make difficult decisions that impact their credit history. It’s food and rent versus student loan and car payments. Basic necessities have to come first, but not without a cost. It’s a sad day when simply putting food on the table brings negative consequences, but that’s where we are.
Defaults on subprime car loans continue to rise.
In many ways, the pandemic has merely brought our existing problems into the light. It’s impossible to overlook tears in the fabric of society as we once did.
As with credit card debt, an auto loan crisis has been in the works long before the pandemic. This January, Fortune reported that more than seven million Americans were over three months behind on car payments. Many of them were subprime loans, and in lots of cases, the amount of the loan exceeded the asset’s actual value.
As you might imagine, the coronavirus has compounded an already bad scenario. Subprime car lenders are seeing significant drop-offs in payments as people go into survival mode during the pandemic.
Short-term solutions don’t cut it.
If you cannot manage car payments, odds are you’re considering bankruptcy a last resort. You may be wondering, aren’t there other options? Yes, there are, but the relief they offer is only short-term.
Many lenders have offered deferments, but that will require extra months of payment. You’ll still have to pay the same amount in the long run, and interest will accrue.
Some of the options aren’t even that viable in actuality. Breaking a lease is very difficult. You may be tempted to explore a transfer, but in this economic climate, it will be challenging to find someone to take over your lease. And if you try to sell a car, expect to get a lot less than what you owe.
Bankruptcy offers lasting relief.
It’s hard to find a solution for financial trouble that offers long-term relief. Deferments are the equivalent of putting a band-aid over a problem.
Throughout the 30+ years that I’ve worked as a Memphis TN debt attorney, I have yet to see a case of someone digging themselves out of deep financial trouble on their own.
This is not a time to wait and see. Nor is it a time to make life any more difficult than it already is. If you’re struggling to make car payments, do yourself a big favor and explore your options with bankruptcy. More often than not, my bankruptcy clients tell me they wish they’d taken the step much sooner.
A better life is waiting. Give us a call at (901) 327-2100 to explore your options.