New data is showing the number of car repossessions is hitting its highest rate in years.
According to Fitch Ratings, more Americans are falling behind on their car payments after a sharp decline in the midst of the pandemic when a surge in used car prices and low-interest rates on new cars had buyers taking out bigger loans.
In May 2021, the number of subprime borrowers at least 60 days behind on their car payments hit a seven-year low of 2.58 %.
Now, with inflation, high gas, and job cuts, in December 2022, the number more than doubled from that low hitting 5.67 %.
Cary Bankruptcy Attorney Travis Sasser says he is seeing clients struggling with very high payments.
"I definitely think that the very significant increase in car prices has contributed to this problem," Sasser said. "Where, you know, we used to see payments, $400 or $500 dollars a month would be common. Now, it's not uncommon for us to see payments of $700 and $800 a month. And, these aren't, particularly, these aren't even luxury cars. These are just the kind of normal transportation that people have."
Sasser says if you are falling behind in car payments, first reach out to the lender to try to make arrangements and get it in writing if they agree.
Otherwise, it can come down to the legal action of bankruptcy to stop a repossession.
"If a finance company doesn't want to help you-you may want to consider a Chapter 13 bankruptcy filing because that does give you protection from repossession," Sasser said.
"It allows you to restructure the loan to some extent. It may help you to restructure other loans. But ideally, you never even get to that point."
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