Legal Question in Bankruptcy in Arizona

How do I stop paying for my motorhome without ruining my credit?

Asked on 3/16/13, 7:49 pm

1 Answer from Attorneys

Frank Waters Frank T. Waters, Attorney at Law, PLLC

You don't. If you stop paying for your motorhome it will negatively impact your credit. The question is how badly. I know from experience why you either can't afford to pay for it or have a good reason to want to get out from under it. Typically with my clients a motorhome is now worth about 1/3 of the original purchase price with more owed than the current value by about $25,000 to $40,000 typically, and gas prices have tripled so a person cannot afford to drive this overpriced motorhome anymore. In my bankruptcy practice living in a retirement community I routinely see people who have stopped paying for thier motorhome. It usually takes about 4 months before a repossession finally occurs. During this time it is reported late up to 120 days, and eventually is listed as a "charge off" on credit. Typically the motorhome is sold (to the bank) for $35,000 to $50,000 less than is owed and the people receive a demand letter to pay the difference. If they don't they get sued even if their only income is Social Security. It can't necessarily be collected, but this results in a judgment on the credit. Often a bankruptcy then occurs so they end up with 1) 120 days late, 2) charge off, 3) judgment, 4) Bankruptcy. Bankruptcy can remove all liability for the motorhome, and it can be done before you are even late, but it lasts on credit for 10 years. Its only advantage is it is one major negative instead of several. Bottom line is the only way to avoid major credit damage is to pay for the motorhome on time.

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Answered on 3/18/13, 10:28 am

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