I met with a gentleman from church yesterday with a rather unique situation that I wasn't sure how to deal with. Two years ago he impulse bought a new car in IL @ 19% interest (poor credit) so he'd have reliable transportation for his kids. Within days he tried to take it back, but the dealer wouldn't budge. Anyway, within weeks he lost his job and has not made a single payment! There was a downpayment initially, but that only affects initial principle for the loan. He doesn't have insurance either. He's been essentially homeless the past couple years. He recently got another job but only brings in about $800/month, and custody arrangements and school are keeping him from taking more hours or a different job.
Ideally, he needs to get rid of this $25,000 vehicle and into something much cheaper but still reliable, but I'm not sure what he needs to do to get out of this. He's told the lender in the past to just take it, but nothing has happened. He said he's not even received any collection notifications. I wonder if the "bad credit" insurance policy that was part of the deal somehow paid this off??? I'd never seen such a thing (is it like PMI?), but I didn't read through the policy either.
Should he just stay with status quo until car is eventually repo'd, which may not happen for some time apparently? File bankruptcy?