By Eric Olsen, Executive Director, HELPS Nonprofit Law Firm
Recreational Vehicle (RV) loans last typically for 10-15 years and sometimes up to twenty years. Often a medical condition or simply a change in lifestyle makes the RV no longer necessary. Sometimes a high RV payment can become simply unaffordable. What are the solutions for seniors with an RV they no longer need or with an unaffordable RV payment?
If you have equity in your RV, meaning it is worth more than what is owed, you can sell it, pay off the loan, and pocket the difference. Or you can sell the RV for what it is worth and cover the difference owed to the bank, so the bank will release the title to the new purchaser. However, often more is owed on the vehicle than the amount it would sell for and many seniors can't afford to make up the difference. I have been an attorney for over forty years and am the Executive Director of HELPS, a national charitable nonprofit law firm that helps seniors maintain their financial independence. I will explain your options if you can no longer afford your RV payment and you can't sell the vehicle for enough money to pay off the loan.
You can simply stop making the payment. Having money for basic needs may outweigh the negative impact on your credit score. You can keep other credit or credit cards as long as they are not issued by the same lender who gave you the RV loan you are not going to pay.
Don't feel guilty if you can no longer afford to pay for your RV. This is a very common problem. The contract you signed contains provisions for a possible default and is one reason for the interest rate on the loan. If your RV payment is being taken from your checking account automatically, you can contact the lender to have the automatic payment stopped.You don't need to give a reason – you just want the automatic payment stopped.
You will eventually get a call from the lender about the missed payments. This is the best time to tell them that you can't afford the RV and they should collect it. You could try telling the lender earlier, but if you are current on your payments, it's difficult to get through to the right person. When you are in default, the person that calls will know what to do. The lender shouldn't bother you about the payment. Why? Because they don't know how much money you will eventually owe, if any. It will finally be picked up and sold by the lender, probably for less than the balance of the loan. After it is sold, you will receive a notice of the amount of money still owed or the "deficiency amount."
What happens when you get a deficiency notice? Our most important message for seniors is that federal law protects your Social Security, pension, disability, and VA income.The debt doesn't need to be paid. This income can't be garnished or taken from you – even if a creditor files a lawsuit and obtains a judgment. States also have exemptions laws that protect other property.
It is my experience that it is not common for seniors to be sued for a deficiency for an RV loan, perhaps because a collector realizes that a senior's income is protected.
Collectors will, however, make harassing phone calls and send threatening demand letters. They will never tell you that your income or property is protected. They use intimidation and threats to get a senior to pay.This unwanted collector contact can be stopped.When a person sends a collector what is called a "cease and desist" letter, a collector may no longer call or send demand letters to that person. A template is available on the HELPS website.
Seniors who owe money for a defaulted recreational vehicle loan often owe other debt as well.Many don't realize their income is protected and go without basic needs to pay debt they can't afford. A federal law called the Fair Debt Collection Practices Act provides that when a person is represented by an attorney, collectors may no longer call or send demand letters to that person.They can only communicate with that person's attorney.That is what HELPS does; we represent seniors nationwide in order to stop unwanted collector contact.
Seniors can stop making RV payments they no longer can afford, and they can be protected from collector harassment. Here is a link to a HELPS YouTube video where I explain in more detail why and how you can surrender an RV you can't afford.
If you have further questions please visit our website www.helpsishere.org or call HELPS toll-free 855 HELPS-US.No qualified senior is ever turned away.
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