You may still owe after repossession

Dear Terry,
I live in California and the mortgage company I worked for closed. I have found new, lower-paying employment, but have fallen behind on my car payment.
-- Laura

Dear Laura,
Has the car been repossessed already? If not, talk to your lender. Because you have a new job, the lender may be willing to refinance the vehicle for a longer term to lower the payments.

If it has been repossessed, the lender, or its collection agency, always has the right to seek payment for the difference between what the vehicle fetched at auction and what you still owed, plus legal fees and interest.

They can seek to garnish your wages, but most lenders will work with you if you want to make monthly payments on the balance owed. Just don't be surprised if that balance owed is a lot more than you thought it would be, once all the fees and interest are tacked on. Good luck.

Here are this week's reader questions:

• Trading in gas guzzler may cost you • Should I take out a loan for my fiance? • Can a lender pursue payment after a repo? • Will a "voluntary repo" trash my credit?

If you have a question for Terry, e-mail him at Driving for Dollars. Save money on your car -- sign up for Bankrate's new weekend Car & Money newsletter.