What To Do When You Have An RV Payment You Can't Afford

It is not uncommon for a senior citizen to find a loan on a motorhome or fifth wheel has become unaffordable. Life changes. We all know this fact, and as we age it becomes especially clear. Sometimes a senior citizen can no longer use the RV do to illness or health conditions. Other times, changes in income mean an RV payment is simply too expensive.

Nearly every financing contract for a recreational vehicle has has provisions for surrendering the RV. Senior citizens should understand surrender of an RV because of changing circumstances is not terribly uncommon.

If your RV has equity, you can sell it yourself, pay off the loan, and pocket the difference. Unfortunately, most of the time, this is not the case for persons no longer able to make payments on an RV.

For persons without any equity in an RV, surrendering the motorhome or returning the camper to the bank does not have to be a complicated process. There are a few ways of surrendering your interest in an recreational vehicle.

Stop making the payments and wait for repossession.If you can’t afford the payment, you can simply stop making payments. The financing agency should eventually come and pick up the vehicle. Many senior citizens do not like this option, because it is typically slower than the other methods described below. It does, however, allow you to use the RV until it is repossessed.

If you have an automatic withdrawal from your bank account to make the payment, make sure you cancel this.

If you have financed the RV with a credit union, and you have a bank account or other secured loans with the credit union, you should know there are special considerations for dealing with credit unions and debt. Please contact us and we will discuss these considerations with you.

Stop making the payments and contact the bank/credit union/financing agency regarding surrender. This is typically the most common method of surrendering an RV. Call the lender and tell it that you can no longer afford the loan payments.

After surrendering the RV, the vehicle will eventually be sold at an auto auction. That difference between the amount owed to the lender and the amount of money received from the auction of the vehicle is called a “deficiency.” You will eventually receive a notice of the amount of money still owed, or the “deficiency" balance. If the deficiency balance is not paid, the lender can pursue further collection actions. It may turn the loan over to debt collectors, or sue you for the balanced owed.

While a lawsuit for debt sounds very scary, nearly all of the senior citizens and legally disabled persons served by HELPS do not have any reason to worry about a lawsuit.A large percentage of lower income senior citizens and legally disabled persons are judgment proof.

For a judgment proof person, a lawsuit and subsequent judgment for any type of consumer debt will not result in any power to take anything from the judgment proof person. It does not matter if the deficiency balance is one million dollars. If you only have protected income like Social Security Benefits or a pension, the lender or debt collector will not have any ability to touch your funds.

Almost all other assets owned by lower income senior citizens and legally disabled persons, including cars and a home, are likely protected from a judgment for an RV debt by state exemption laws. Here is a link to an article that explains this in more detail: Why your retirement income is protected.

Being jugdment proof, however, cannot protect you from debt collection. It is legal for creditors and debt collectors to call you and send demand letters. Most debt collection agencies depend on intimidation. Dealing with debt collectors can be very stressful, but it can be prevented. HELPS Nonprofit Law Firm represents senior citizens and legally disabled persons in order to stop unwanted debt collector contact. Federal law provides when a person is represented by an attorney, debt collectors may no longer call or send lenders.

Often senior citizens struggling with RV payments are dealing with debt owed to other sources. These debts, from credit cards to medical bills, are subect to the same laws discussed above. While bankruptcy is an option, it is often unnecessary because the senior’s income is protected already. Seniors simply need protection from debt collector harassment. That is what we do. If you have any questions about surrendering an RV or any other debt related questions, please feel free to give us a call. We're happy to discuss your situation or any related debt matters.  

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