I got stuck with a truck that's $7K underwater in my divorce. What are my options in dealing with the debt?

This is even more challenging if your ex wants to cancel the loan, requiring you to refinance at a higher interest rate, further straining your limited monthly income.

If you’re in this situation, here are a few options to help manage the upside-down loan and get your finances back in order.

Negotiating with the lender

Lenders prefer to avoid repossession, so they may be willing to work with you if your loan is underwater and they fear nonpayment.

Because a car loan is secured debt, lenders can still collect the unpaid balance if they repossess the vehicle and sell it for less than what’s owed. This means they typically won’t reduce your balance unless they believe you’re unable to pay at all.

However, they may offer refinancing or modified payment terms to make the loan more affordable.

Selling or trading in the truck

Selling or trading in the truck is another option. According to Edmunds, about 25% of trade-ins for new vehicles have negative equity. Many buyers roll that negative equity into their new car loan, but this is a bad idea — it increases your monthly payment and puts you further underwater.

Selling or trading in the truck works best if you can pay off the $7,000 shortfall and purchase a cheaper vehicle with a lower monthly payment. If you have the savings cover the debt and downgrade to a more affordable car, this is probably your best bet.

Voluntary surrender

Voluntary surrender — returning the car back to the lender, rather than having it repossessed — is not a good idea.