The Perils of 'Jingle Mail'

The previous post reminds me of a topic that I've been noticing on consumer finance boards:  people who have been reading stories of "jingle mail" and think that it's not only a good idea, but a way of life.  Folks who say something like "I've decided to just let them repo the car.  The payments are too high."


I don't know how common this belief is, but it's dangerous ignorance, even if it's only affected a few people.  In case I have any readers thinking along these lines: your auto loan is not like a mortgage.  If you let them repo the car (or the boat, or the furniture, or whatever other item you paid too much for) the bank is going to sue you for the difference.  Maybe not right away, but eventually.  And a judge is going to make you pay it unless you declare bankruptcy.  They can garnish your wages, seize the contents of your bank accounts, and engage in all sorts of other unpleasantness if you don't pay them.

I mean, if you're getting ready to declare bankruptcy anyway, it might be best to let them repo the car.  (Your attorney can advise you on this.)  But in the majority of cases--including mortgages, unless you live in the handful of states that forbid lenders from pursuing you for the deficiency--you cannot get out of a secured debt simply by handing over the collateral.  Again, I don't know that it is a common misconception.  But it scares me to think about anyone just letting an asset go because they're tired of the payments, without realizing that this doesn't make the debt go away.  If you can't make your car payments, there are ways to deal with the problem:  for example by selling the car, buying a beater, and taking out a note for the deficiency.  Or maybe even with a Chapter 13 bankruptcy.  But just letting it go and figuring you're done with it is almost always a bad decision.
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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