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.
Presented by

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.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In