Running on Empty

Consumers should also realize that although they may have signed the paperwork for the loan at the car dealership, the transaction is financed by a third-party lending institution. Toyota Financial Services, Ford Credit, Chrysler Financial and GMAC Financial Services are among the largest. Check your paperwork to find out whom to call. There is no penalty for giving them a heads-up.

"Overall, people are reluctant to face up to money issues -- whether that's what your credit card interest rate is or if you're finding you're falling behind on your auto payment," said Eric Hoffman, spokesman for AWARE. "Sweeping it under the rug is not going to make it go away."

GMAC said it will work with borrowers when they get behind and three years ago launched a Web site called SmartEdge to educate consumers on auto financing. Spokesman Michael Stoller said the company tightened underwriting standards three times last year to require larger down payments from borrowers with lower credit scores to safeguard both the company and consumers.

"We don't want anybody to get in over their head," he said. At the same time, "we're protecting ourselves from a business perspective as well."

Creditors may be more lenient when you have a strong payment history backing you up. In addition, let them know if the situation is temporary -- a one-time budgetary hit from a hospital stay, for example. They may be willing to give you a grace period to pay your bills or even defer them for a few months.

"Chances are in this environment, if you have a reasonably average credit rating, most lenders are going to be more than willing to work with you," said Jack Gillis, spokesman for the Consumer Federation of America. "A skipped payment can impact your credit rating as well as make it more difficult to negotiate a new plan later on."

If you've already missed a payment (or more) . . .

On a recent afternoon, more than a dozen people gathered at Legal Services of Northern Virginia in Falls Church for free advice on filing for bankruptcy. Many were in danger of losing their homes, and for some, their cars were not far behind.

One of the women attending the workshop was a 54-year-old stay-at-home mom from Reston who spoke on condition of anonymity because she was applying for jobs. She said she fell into a financial black hole after she and her husband divorced about two years ago. She has been living off money she received from him for her share of the family home, along with about $360 a month in child support for their two kids, but funds are running out.

She was able to eke out her $615 payment for the lease on her Toyota Highlander Hybrid in January but missed the next two months. She sent her lender another check for part of the amount in April "hoping that would call the dogs off," she said. But it left her with only about $50 in her checking account. Her lease does not expire for another year. Her phone has started ringing.

"You tend to avoid the phone calls," she said. "Sometimes I pick it up and say, 'Look, I'm trying to get a job.' "

But it's never too late to make amends. If you've missed two payments, don't miss a third. If you're three in the hole, don't make it four.

"Most lenders would rather have an adjusted payment schedule than foreclose on the vehicle," Gillis said. "It's more expensive, and it's a hassle. They're not in the business of reselling cars."

San Gabriel said she called her dealer to complain when her car broke down after just a year on the road. She said she asked the dealer to contact the lender to explain why she stopped making payments. But once she started receiving phone calls from creditors, she realized she was the one who had to discuss it with the lender.

San Gabriel negotiated a plan to extend the length of her loan to make up for her missed payments. Her Jeep sits immobile in her driveway while she putters around in a used $1,600 Buick that she purchased with help from her father. She is trying to save money to get the Jeep fixed.

"I definitely think that the bank that I'm working with is definitely fair," San Gabriel said. "If somebody borrowed money from me, I'd definitely expect them to pay it."

If you're at risk of defaulting or being repossessed . . .

At the end of the bankruptcy clinic in Falls Church, lawyer Nancy Ryan distributed a handout titled "Can I Keep My Car?" The short answer: It's getting tougher.

"They're getting more aggressive with the cars now," she told the class. "They want everyone to be on the hook for the full amount of the loan."

Another woman in the class, a 39-year-old from Alexandria, said her Ford Taurus was repossessed in 2003 after she lost her job and could no longer afford the payments. She still owed $10,000 on it, and her lender has begun garnishing her wages at her new job to collect that debt.

A year ago, she bought a replacement car, a $14,000 used Ford Explorer. She pays $466.01 a month for it but finds it hard to keep up with the old debt still hanging over her.

"Now the past debt is going to cause me to lose this one," she said. "I was trying not to go there. I was trying to work it out. But I wasn't able to do it."

According to Edmunds.com, about 1.6 million autos will be repossessed this year, about a 10 percent growth over last year. Financial experts said that it is possible to bounce back from repossession or even bankruptcy but that it requires kicking bad spending habits and perhaps even a change in lifestyle. Credit-reporting agency Equifax said it takes seven to 10 years for a bankruptcy or collection to be removed from your credit report.

"People need to think realistically about how much car they need and what it's worth to pay for that," Reed said. "It all starts with people getting in over their heads in the first place."