As Washington scrambles to save General Motors (GM), the politics behind any bailout means small investors will ultimately be the ones who get left behind. On Capitol Hill protecting jobs, propping up the economy and punishing greedy corporate executives are the catch-phrases du jour. Guarding the interests of mom-and-pop stakeholders garners little more than lip service.

In a world of more market access and individual retirement responsibility, many small investors took a broker's advice and bought into the GM story. And we're not talking about the auto maker's stock, which has lost 94% of its value over the last decade. These investors thought they were taking the safe and conservative route by purchasing GMAC SmartNotes. It turns out this unsecured debt is neither safe nor conservative -- nor very smart.

GMAC, once a wholly owned unit of General Motors, is the largest lender to GM's car dealers. In 2006, GM sold a 51% stake to private-equity group Cerberus Capital Management. That was back when GMAC was a strong source of profits for GM.

But today GMAC, which also has a home-mortgage arm in addition to its auto-lending business, has gone the way of other financial firms caught up in the housing and credit bubble. GMAC lost a net $2.5 billion in the third quarter, more than the $1.6 billion it lost a year earlier, and warned that its home-mortgage unit is on the verge of collapse. Its debt is well into junk territory.

GM itself is trading at just over $3 a share, and Deutsche Bank recently downgraded the stock to Sell with a price target of zero -- yes, zero.

"It's been a spiral down. Prices in the corporate [bond] market tell you everything, and prices and spreads are telling you [GMAC is] not going to make it," says Marilyn Cohen, president of Envision Capital Management, a Los Angeles fixed-income money manager. Cohen warned against SmartNotes back in 2006, calling them "the ultimate Roach Motel: you can get in, but exiting is a bit sticky." GMAC has offered as much as $15 billion in SmartNotes since 2007.

For its part, GMAC, which has more than $160 billion in debt outstanding, says it "has met its obligations to investors in the past and we intend to continue to do so," says Gina Proia, a spokeswoman for the company. She did add, however, that "SmartNotes is an unsecured obligation and obviously investors have to make their own individual choices about the level of unsecured exposure they feel comfortable with as in any investment."

This means that if GMAC does go bankrupt, note holders will likely get cents on the dollar.

"They were never appropriate for retail investors. GM's problems have been festering for the past 10 years, so if a broker sold you a SmartNote in the last 10 years I'd say it wasn't appropriate for individuals," says Sean Egan, founding principal of Egan-Jones Ratings, an independent credit ratings agency.

So what should you do if you hold a GMAC SmartNote? Cohen recommends first checking out what the market looks like for your security. You can do this on a web site created by the Securities Industry and Financial Markets Association by typing in your CUSIP number (found on your latest financial statement or original order confirmation). If there weren't any trades for your security this year, "it'll be tough to get out," Cohen says. But if there were trades you'll be able to see what the last trade price was and get a sense of what you can sell for today. If you can recoup at least some of your investment now, it's not a bad idea to consider selling rather than risk becoming a creditor in a GMAC bankruptcy.

"As a general rule, if you're going to hold on to it, that would presuppose that you believe for some reason that you might be able to get more than the bond is trading for right now at some time in the future," says Morningstar fixed-income specialist Eric Jacobson. However, in the event of a bankruptcy, "there are all sorts of negotiations and as an individual investor you're not going to have any voice in that whatsoever. The risk that it wouldn't come out in your favor is pretty high."

Do brace yourself for bad news either way. SmartNotes due in July 2020 have lost about three-quarters of their value, according to Bloomberg. "Is there a moral to this story? Yes," Cohen says. "Nothing stays the same. What is good credit quality today may be junk tomorrow."