 Voluntary repossession of a leased car
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 Dear Dr. Don,
I leased a Jeep 18 months ago. My situation has changed a lot since then. I am about to lose my job. On top of that, I am pregnant with twins. I have a 680 credit score and never had any problems at all on making the payments. The story, however, is changing.
I have a payoff on the lease of $22,105. The Jeep's estimated trade-in value is
$13,000. I have considered voluntary repossession of the Jeep. I would
not be able to make the payments nor pay the $9,000 difference. What
should I expect if I can't pay the difference? Please advise on the
process and what's likely to happen. Thanks in advance for your advice.
-- Estela Expectant
 Dear Estela,
The only thing that a voluntary repossession does for you that an involuntary repossession does not is save you the cost of the lender's expenses in hiring a repo man.
A voluntary repossession is still going to be listed on your credit report, even though it may be listed as voluntary. You are still liable for the difference between the payoff balance and what the lender receives from the sale of the repossessed vehicle, net of expenses, called the deficiency. The FTC Web site's "Facts for Consumers" guide includes an article on vehicle repossession that explains your rights and the repo process.
The big difference between the payoff value on the lease and the trade-in value of the lease probably means that you won't be able to find someone to take over your lease by listing it on Swapalease or LeaseTrader.com, but it's worth a look at these sites to see the listings for cars like yours.
If you can't pay the deficiency, the lease finance
company will have to decide whether it will seek a court
judgment against you. You might be "judgment proof," meaning
the company doesn't have any real prospect of collecting that judgment,
but a judgment will also show up on your credit report.
If you lose your job and don't have any luck finding a new one, personal bankruptcy is an option to consider. You should consult with a bankruptcy attorney to decide if and when this is a realistic decision for your situation.
To ask a question of Dr. Don, go to the "Ask
the Experts" page, and select one of these topics: "Financing
a home," "Saving & investing" or "money."
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