[nova]

First I'd recommend finding a financial counselor of some sort because upside down to the tune of $10k makes me think he was living beyond his means.

Second he may have to pay the difference? Sounds to me like there's wiggle room to negotiate.

That may involve a short sale of the vehicles coupled with an unsecured personal loan for the remainder if that gets him into a payment he can afford.

It may involve the CU realizing they're never going to get the remainder and writing off the loss to save money and hassle in legal proceedings.

If he can't either

A. Sell the vehicles for the full balance and pay off the loans or

B. Short sale the vehicles and get the CU to write a personal loan for the balance that he can then afford and keep current

then it IS going to hurt their credit, its just a matter of how much. The trick is going to involve working out the "least bad" option with the CU.