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Archive for the ‘auto repossession’ Category

Q: I paid off the balance of my car note after my car was repossessed. However the repo is still showing up on my credit reports. Is there any way to get this repo removed?

A: Under the Fair Credit Reporting Act, negative information can stay on your credit report for 7 years. So by law, just because you settled with a company after a car repossession, that doesn’t mean that they have to remove it from your Equifax, Experian or TransUnion reports.

Continue reading “Can I Remove A Car Repo From My Credit Report?” »

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When you take out a car loan, you are agreeing to make all monthly payments on time through the terms listed on your contract. If you end up struggling to make your monthly payment and miss several payments, you could end up having your vehicle repossessed. Not only will you lose your car, truck or motorcycle, but your missed payments will show up on your credit report and severely hurt your credit score. Your account will be in “default” and the bank or financial institution you got the car loan from will have the right to seize your vehicle.

Here are few ways to avoid repossession of your vehicle:

1. Trade for a cheaper vehicle. If you think you can afford a certain monthly payment, consider trading down to a cheaper car so to reduce your monthly payment. Talk to your dealer about your options in trading down and determine what your new monthly payment would be. Keep in mind that this strategy will only work if you don’t owe more on the loan than the car is worth.

2. Refinance your loan at a credit union. Refinancing isn’t always the most cost-effective option when you want to reduce your monthly payment, but it can work for some people. Instead of working with your current bank or their competitor, consider seeking out a refinancing loan package from a credit union. Credit unions are usually easier to work with and may help you get the best possible interest rate for your new loan.

3. Contact your bank or loan provider about any financial troubles. If you know you just can’t make your monthly payments anymore – and probably won’t be able to pay that loan in the near future – contact your bank or loan provider to find out what options you do have. Don’t wait for your lender to contact the repo company! Some lenders may be a little flexible when you’re direct and honest about your situation, and they could offer you some alternative payment plans or a different loan package.

Download: How To Negotiate With Your Lenders

4. Consider a lease transfer. If you are leasing your vehicle and can’t afford to make payments, consider a lease transfer, or a lease assumption. You will need to find a suitable person to take over your lease and complete the lease transfer paperwork. This is a fairly simple and straightforward process, and can prevent you from paying the high fees associated with terminating your lease early.

5. Sell the car. If you can get a decent price for your car in its current condition, consider selling it and using the proceeds to pay off a good portion of the loan. Even though you will still have a loan balance, you can continue making very small payments going forward and avoid the negative effects of repossession altogether. Of course, this might be a last resort for most people. You may still need to purchase another car, and will need to either save up enough money to make a cash purchase or get a new loan that you can actually afford.

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Question:

I have a question from a reader today who wanted to get some information about an auto that was actually repossessed via voluntary relinquishment. He wrote to me saying, “I’m recently divorced, and my ex decided to voluntarily relinquish a car that was in both of our names just before our divorce was final. I got a letter from a collection agency demanding more than the car was originally worth. The divorce papers state we’re equally responsible, but I know she’ll never pay because she can’t even pay child support.” He said he has custody of his child and can’t afford to pay anything at this time without some help from her in terms of keeping up with all of his other bills. So his question really boiled down to this. He said, “I pulled my credit report, and it shows the repo, but it also shows an amount on the report that is less than a quarter of what the agency is demanding. Can I use this information as a bargaining tool to get them to settle?” He also mentioned he was told to file bankruptcy, but he’d already done that back in 2005.

Answer:

First off, no, don’t think about filing bankruptcy just due to a car loan that was in both your and your ex‑wife’s name, even though the amount owed might be considerable relative to your income. What I think you should do is, yes, by all means, try to negotiate with the collection agency that has reached out to you, and let them know, in no uncertain terms, that you are cash‑strapped, that you are a single father, that you’re raising your child on your own, and that the amount that was due, obviously, you’re aware of the fact that it’s legally your responsibility and your ex’s, but that they’re asking for a multiple of what is the amount that the car was actually worth and three to four times what’s actually shown on your credit report.

Don’t be afraid to let them know that you have seen your credit report recently and that you know that there’s a huge difference in terms of the amount that they’re trying to demand and the amount that’s shown on your credit report. I would suspect that this will be a huge point of leverage to use in the course of your negotiations, because a lot of times collection agencies try to say, “Look, we’ll ruin your credit. We’ll put something on your credit report.” And your defense to that is, “Hey, the information is already there. It’s already showing up on my credit report. I’m merely trying to clear up the matter.”

What I would suggest that you do, in terms of offering a settlement amount, is either try to pay a lump sum and get it all done and over with in one fell swoop, or only commit to a monthly amount that is modest and firmly within your reach in terms of paying every single month without fail. I don’t like the idea of a monthly payment plan to pay off an old collection account, especially for a repossessed car that you’re not getting any value out of, as much as I like the idea of doing a lump sum.

If you negotiate a lump‑sum payment to pay off X amount and get this debt taken care of once and for all, try to get something called a PFD, or a pay for deletion. That’s where you agree to terms with the collection agency about an amount that will settle up the past‑due bill, and that amount will be considered acceptance of payment in full. In exchange for you making that cash payment, the collection agency will agree to delete all negative information from your credit reports, that is, from your Equifax, Experian, and TransUnion credit reports. They won’t always agree to this, but you should certainly ask for it.

If you can get them to do this and to agree to that, make sure you get a letter in writing from the collection agency, upfront, before you turn over any money. That letter would be proof that you might need later if they don’t hold up their end of the deal and if you have to go to the credit bureau and dispute the information and say, “This was supposed to have been deleted from my report because I paid it per an agreement between myself and the collection agency.”

So I hope this information helps you. Good luck raising your child.

Related articles

• What’s the Best Way to Get Negative Information Removed From My Credit Report (askamoneyexpert.com)
• Key Differences Between Equifax, Experian and TransUnion Credit Reports (askthemoneycoach.com)

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Q: I Have a Car That Was Repossessed About 5 Years Ago. My Credit Report States That It Will Report for Another Year. Is That True That It Will Fall Off or Will It Be Reported By Another Company. If So, Should I Try to Settle the Debt?

A: Negative information (such as late payments) generally stays on your credit report for seven years. So yes, your credit reports are likely accurate in indicating that in about a year or so, that car repossession – which is already about 5-plus years old – will be deleted from your credit files. If you make a lump sum payment to settle the account, or even make partial or monthly payments, then you would “reactivate” this account, so to speak, and extend the length of time for which is will be reported on your credit files. I suspect that you may have seen this information on your Experian credit report because Experian credit reports contain a unique feature that many users find extremely enlightening.

Experian Credit Report Highlights

For all of the accounts listed in your credit file, Experian shows you “Status Details” indicating when an account is scheduled to fall off your credit report. For example, an auto loan that you paid off and closed in July 2008 will show the following Status Details: “This account is scheduled to continue on record until July 2018.” Or let’s say you had an account go to collections and ultimate get written off by a creditor. In your case, the negative information is your car repossession. For you and anyone else with these and other negative marks in your credit file, you won’t have to wonder how long a certain blemish will haunt you. That critical “Status Details” section of your Experian report will give you that precise information.

No Need to Settle Very Old Debt

Regarding settling your debt, unless you’re in desperate need of getting that car repossession off your credit report before a year’s time (this might be true, perhaps, if you need to qualify for a mortgage), and unless you’ve got thousands of dollars sitting around to pay off that old car debt, I wouldn’t bother trying to settle the account. It’s already been on your credit report for nearly six years. I would simply tough it out for the next year or so until it falls off your credit.

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