When you fall behind on your car payments, you run the risk of having your car repossessed. This means that if you're in arrears by even one month, you could wake up one morning to find that the bank has taken possession of your car.

Once your car has repossessed you don't have a lot of options. If you don't have the money to pay the amount in default, the bank will customarily sell your car--and send you the bill for the difference. It can get worse from there. The bank can sue you for the difference between what they sold the car for and what you still owed on the car when it was sold and get a judgment against you. Most likely you won't be able to afford the judgment. After all, if you could afford to pay that amount, you likely would not have gotten behind in your payments in the first place. Once a judgment is in place, the bank can exercise its right to collect the debt, and this can mean wage garnishment.

Once the wheels of repossession are in motion, the process takes on a life of its own. That's why its important to follow these steps when you're faced with making your car payments late--or not at all.

• Don't bury your head in the sand. If you know you're going to have trouble making your payment, call the bank. If the bank calls you, pick up the phone.

• If you're experiencing a temporary cash-flow problem, let the bank know. Ask if they have any programs available for people in your situation. Perhaps they can tack the late payment on the end of the loan to help get you caught up.

• If you know you won't be able to pay the loan over the long term, you'll have to get rid of the car. If the car is worth more than what you owe, you'll need to sell the car. Work with your lender and let them know you are actively trying to sell the car.

• If you are "upside down" on payments, you owe more on the car than it is worth. You may need to consider giving the car back to the bank voluntarily and making arrangements to pay the difference. You may be able to consolidate the amount you owe on the car along with other debt into a more manageable payment.