If you find yourself owing substantially more to your car lender than your vehicle is worth, you do have options. First, you need to look at this problem in financial terms. For example, if you owe $30,000 on a vehicle worth only $15,000 today, you effectively have $15,000 unsecured debt, just as if you had a $15,000 unsecured credit card debt.
If you add up all of your unsecured liabilities and you owe $20,000 or $30,000, it would not be unwise to look at bankruptcy options to get yourself back on track. Chapter 7, if you qualify, would allow you to just walk away from your upside down car loan and start over, especially if the car is no longer operative or needs significant repairs.
Chapter 13 can allow you to restructure your out of control car loan, along with all of your other debts. If your car loan is more than 910 days old (2 ½ years), you have even more options in that you can “cram down” your outstanding debt to equal the fair market value of your vehicle. You can also benefit from a reduced interest rate that is capped at 5%.