I cannot pay this loan. Should I file for bankruptcy?

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Q. I signed a loan for my son seven years ago and unfortunately I can’t and he can’t pay it. Things went downhill after my divorce. Should I file for bankruptcy?

– Poor

A. We’re sorry to hear about your divorce.

As you know, as a co-signer of the loan, you are hooked, just like your son.

Sometimes bankruptcy is the best choice to help people start fresh and get back on their feet financially, said Karra Kingston, a Union City bankruptcy attorney.

She said a lot of people who have car loans that they can’t pay for, assume that they can just return the car and the leasing or finance company won’t hold them liable. Unfortunately, that is not the case, she said.

“If people voluntarily repossess the vehicle, the car company will try to sell the car,” Kingston said. “Any amount that does not cover your outstanding loan can still be withdrawn.”

Most of the time, voluntary redemptions are large loans, and most people can’t afford to pay back that debt, she said. If you have a voluntary repossession or you owe a large amount outstanding to a merchant, filing for bankruptcy might be your best option, she said.

“Many New Jersey bankruptcy attorneys offer free consultations that you can use to see if this is the best way to go,” she said. “Bankruptcy is a tool to help people start over and get back on their feet.”

Email your questions to [email protected].

Karin Price Müller writes the Bamboo led Column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com‘s weekly e-newsletter.





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