Damages extend well beyond losing your vehicle if a repossession occurs. If on time payments are not being made according to your contract the lender can attempt to repossess your vehicle.
Repossession what you need to know
Your vehicle is used as collateral to secure the loan. If you fail to meet the obligation of the contract the consumer runs the risk of repossession.
Having your vehicle repossessed will have lingering effect on your credit rating. In return impacting the consumer in being able to obtain affordable financing in the future.
The repossession will stay on your credit report for seven years after you are first delinquent with a payment. This will negatively impact the consumers credit score.
A debt collection agency will more than likely take over the note. They will attempt to sue you in court and garnish your wages.
Repossession: What is it?
In simple terms the lien owner reclaims the vehicle that has not been paid in full or the consumer fails to meet the terms and condition of the contract.
If a consumer account becomes delinquent a lender can start the repossession proceedings. Lenders will use a third-party towing company that specializes in repossessions to attempt to retrieve the vehicle. A lender can start this process if only one payment has been missed. They typically do not want to go through this process due to the fact it will only net 30% of the loan value. This is often their best recourse if payments are not being made according to the terms and conditions of the contract. The deficiency balance is often charged off and is pursued through a judgement and garnishing the consumers wages.
1. If your vehicle has been repossessed can you get it back?
If the lender has repossessed your vehicle you may get it back by paying the loan and all repossession fees in full. In some instances, the lender will negotiate a new payment plan with new terms and conditions.
2. My car was repossessed what happens next?
Typically, your vehicle will be sold through a local auction at a fraction of the resale value. The lender may pursue a judgment resulting in a garnishment of wages if there is a deficiency balance.
3. My vehicle was in my driveway can the repo company come on to my property?
Typically, a repossession cannot enter private property to retrieve a vehicle, but in some cases, they may have limited access to repossess a vehicle from the driveway. A repossession company under no circumstances enter your garage to retrieve your vehicle.
4. How long does a repossession stay on my credit report?
According to Equifax, Transunion, and Experian auto repossessions stay on your credit report for seven years from the original delinquency date. The impact will lessen over time.
5. If I have a repossession can I have it removed from my credit report?
The answer is yes you can file a dispute with all three credit reporting agencies if they fail to respond with in thirty days it will be removed from your credit file.
6. I voluntarily turned my vehicle in to the lender does it still have the same impact on my credit score?
Volunteering to turn my car into the lender has a negative impact on the consumers credit report, however the impact may be slightly less than if the lender had to pick it up.
7. Can the repossession company ask the police for assistance?
According to the Fair Debt Collection Practices Act the police cannot assist or be involved in the repossession process. The repossession company cannot threaten to call the police they consider it a private matter.
8. Can a repossession company break into your vehicle?
Creditors are allowed to engage in self-help to repossess cars. But that freedom is not without limits. If a creditor risks “breaching the peace,” then it is not allowed to repossess the vehicle. If the repossession company breaks into your garage to take the vehicle, that is breaching the peace.
9. If there is a deficiency balance that was charged off how long will it stay on my credit?
A charge off will stay on your credit report for seven years from the time it was charged off, the total time of delinquency could be up to 7 ½ years.
10. My car was repossessed how is it effecting my credit?
According to myfico.com https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=18&ved=2ahUKEwjv_smq9-jcAhUHs1QKHamOAtMQ-TAoADARegQIBhAW&url=http%3A%2F%2Fwww.myfico.com%2F&usg=AOvVaw3mKhwLRQnm_B4mNAfAd4C3 your score could be negatively impacted up to a 100 points.
11. Does the consumer have to be notified before the vehicle can be repossessed?
Every state has its own rules regarding repossession but having a security interest generally means your lender can repossess the car without notice if you default on the loan. Many things can constitute a default but the most common reasons are not making timely loan payments or not having car insurance.
Bankruptcy is designed to protect individuals or businesses that are unable to meet their financial obligations–and provide protection to involved creditors as well. While bankruptcy is a serious procedure and should only be considered if absolutely necessary, sometimes it is the best solution for those suffering severe financial hardship. And, for some, it may be the only solution.
One area that bankruptcy can be particularly helpful in alleviating financial hardship is by protecting property that may be in danger of repossession . This is when creditors take back goods that buyers are failing to make timely loan payments on. Some loans are secured–meaning the buyer has put down some form of collateral, often the item being purchased–while some are unsecured–typically credit cards. If you default on an unsecured loan, the only option creditors have when collection attempts have failed is to sue. But with a secured loan, creditors can repossess the collateral and sell it. Of course, if that doesn’t provide sufficient funds to wipe out the loan, they can then sue you for the remainder of the loan balance.
Bankruptcy Can Stop the Repossession Process
Bankruptcy can sometimes help cancel the debt, or even allow you to stop the repossession process. After filing a bankruptcy petition in bankruptcy court, all creditors are prevented from making any further collection attempts. This is also known as an “Automatic Stay”, which is an automatic order from the bankruptcy court issued upon the filing of a bankruptcy petition to all creditors. This applies to creditors attempting to repossess collateral such as automobiles.
Filing a Chapter 7 Bankruptcy to Stop Repossession
If you file for chapter 7 bankruptcy in order to stop repossession, you’ll have to make arrangements with the creditor to bring all payments current after filing for bankruptcy. If you want to keep the car after bankruptcy, you’ll need to sign a reaffirmation agreement and make all payments after the bankruptcy.
Filing a Chapter 13 Bankruptcy to Stop Repossession
In a chapter 13 bankruptcy , the repossession will be stopped and the debtor gains the chance to repay the value of the car to the creditor through the chapter 13 plan. Chapter 13 is beneficial to debtors owing more on a car than what it is worth, since chapter 13 payment plans can lower car payments on car loans where the debtor owes more than the car is worth.
If you’re thinking about filing for bankruptcy in order to stop repossession in you should seek out an experienced attorney in order to find out which option will work the best in your particular situation.