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Collections: Repossession |
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More Ask Susan |
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Back in May I financed a Jeep. I fell behind two months. I never got a call or a letter allowing my to rectify the back payment. Then my vehicle was repossessed.
I called to find out what I could do to retrieve the vehicle and I was told I could pay them $2,000 in 15 days. I know it was inevitable that they were coming to repossess the vehicle but is that standard procedure not to contact my verbally or in writing? -Renee |
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Renee,
It is standard procedure not to contact a person prior to repossession. Imagine what it must be like to reposes a vehicle. It is not personal; the person is only doing the job they were hired to do. Never the less, it is sometimes human nature to “shoot the messenger” and the repossessor never know how a person will react. Alerting the car owner that a possession is imminent may only cause further difficulties.
The Advice Team |
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I had a car repossessed in December. I recently received information in regard to a deficiency payment. Why am I still liable for a car that I no longer have in my possession? And how long do I have to wait before obtaining another car loan? Are there any Pennsylvania laws specific to this subject? -MRL |
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MRL,
A “deficiency balance” is the difference between what the lender sold the car for and what you owe on the loan. Apparently, the lender auctioned off your car and the highest bidder did not pay enough to cover your loan amount. Even though you do not have the car any more, you will have to pay the balance or risk legal action. There are no specific laws, which I am aware of, to prevent your repossession or their attempt to collect the deficiency balance.
The repossession will remain on your credit report for up to seven years. If you do not pay the deficiency balance in a timely manner, this could negatively affect your credit report as well. Sorry, I realize this is not what you want to hear.
The Advice Team |
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I want to know is it better for me to voluntarily give my car back or let them take it. And how do I voluntarily return my car? -Thomas |
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Thomas,
Many people are afraid to talk with their creditors, fearing that they will call attention to their delinquency. However, talking with them can only help; the company already knows that you are delinquent. I recommend that you call your creditor to discuss your options.
To answer your question, turning the car in yourself might save some collection fees. You would also avoid the stress of wondering when and where the repossession will happen.
Ultimately, a repossession is a repossession, voluntary or not. If you take my advice and make that call, maybe the situation can be avoided entirely.
Best Wishes,
The Advice Team |
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If my car is close to being repossesed, can I trade my car for lesser payments, and then have the car dealership pay off the balance? -Martin |
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Martin,
Yes, you can try to trade in your car for a car with a lower payment. If you can, the dealer will payoff the balance on your current car. But you might have a difficult time doing this. You state your car is close to being repossessed. I assume you are delinquent with your car payments. If so, another lender will probably not want to finance another car for you for fear that you will become delinquent with your payments with them also.
The best thing you can do is to bring your existing loan current. Then, you could explore the possibility of trading your car in for another car with lower payments.
Good luck,
Susan |
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Is there any thing I can do to avoid going bankrupt? I have heard people say "just call the bank and tell them to come and get whatever the item is" that you can not make the payments any more. -Judy |
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Judy,
If you let anything (i.e.: car, boat, house, etc.) go back as a repossession, the lender will sell the item to the highest bidder and apply the proceeds of the sale to the balance owed on the item. If the sale price is not sufficient to pay the balance due, there will be a "deficiency balance" remaining. You will be legally obligated to pay this deficiency balance. If you do not pay this balance, the creditor can possibly sue you in an effort to try and collect from you.
The lender can also report this repossession to the credit reporting agencies. This derogatory notation will remain on your credit bureau file for 7 years.
If you file for bankruptcy, a notice that you filed for Chapter 7 bankruptcy can remain on your credit bureau file for up to 10 years. This bankruptcy notice can also prevent you from getting credit during this 10 year time period.
I hope this helps,
The Advice Team |
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Our car was repossessed and we were told that they would sell the vehicle. We heard nothing from the company stating we owed them any additional money or any other type of correspondence. In July of this year we received a letter from a law firm acting as a collector stating we owed approximately $5,578 dollars. When the car was repossessed we only owed approx. $6,500. And how can they sell a good running vehicle for way under the blue book and what is owed? This has been a very stressful situation. -Tina |
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Tina,
According to the Federal Trade Commission, the sale of a repossessed car must be conducted in a “commercially reasonable manner.” This does not mean that they will get the highest possible price - or even a good price.
Since the sale price of your car apparently was not sufficient to pay the balance due, there is a "deficiency balance" remaining. You are be legally obligated to pay this deficiency balance. If you do not pay this balance, the creditor can possibly sue you in an effort to try and collect from you.
The Advice Team |
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