A repossession is where a lender or bank takes ownership of a piece of property usually for non-payment of a car, boat, truck, rv, motorcycle, or an item pledged as collateral for a loan. It is a tricky area of law that many consumers are uninformed about.
How do repossessions affect my credit rating?
Repossessions are definitely a black mark on your credit report. It is unclear the extent of the exact damage that a repo has on your credit score, but it is widely understood that an unpaid repossession is viewed less favorably than one that is ultimately settled or satisfied.
What is a deficiency balance?
A deficiency balance is the difference between what you owe on the loan and what the automobile was sold for. In other words, if you owed $20,000 on a vehicle loan and the car was repossessed and auctioned off for $15,000, the deficiency balance would be $5,000.
My pontoon boat may be repossessed. How can I stop the repossession from happening?
Whether it is a bass boat or an auto repo, the process is still the same for stopping the bank from repossessing the property. In most states you have the “right to cure” any missed payments. This is a law that states you can avoid the repossession procedure by making up the missed payments plus any applicable penalties or fees.
Is a voluntary repossession better than an involuntary one in terms of the credit impact?
Voluntary repos are reported as such to the credit bureaus, but the way it is interpreted varies between banks. Some will see it as a sign that the consumer took the initiative in resolving the debt problem, while others treat it exactly the same as if the repossession was forced.
What is my incentive to voluntarily return the car then?
One advantage is the creditor may not tack repossession fees in the event the vehicle was returned voluntarily. That being said, even then some banks will still tack on the fees for “storage” and other repo costs. Another advantage is that in some states you can reinstate the contract, which allows you to keep the property by making up any late payments plus repossession fees. That being said, if you hide the car or make it more difficult to repossess, then the lender is reserved the legal right to reject the reinstatement.
Can the creditor refuse to accept a voluntary repo?
Yes. This is most often the case when the property being turned in has depreciated significantly. If this does happen a good option is to try negotiating and settling the debt.
Do you recommend using a debt settlement and negotiation company to do this?
Yes. Given the fact the repossession has already occurred, your credit rating has already suffered the negative consequences and the repo man already took the property. Repossessions also show a financial hardship, which is normally enough to get the creditors or banks to negotiate a settlement. To get matched with a pre-qualified provider, simply fill out a form today!
Can the bank send the repo men to seize my auto mobile before I even miss a payment?
Although this is unlikely, laws (and the contract itself) can state it is possible that a creditor can declare you defaulted on your contract under the following scenarios:
- You sold the vehicle
- The car is damaged, stolen, or anything abnormal that else that may have caused its value to depreciate.
- Your financial status has worsened considerably, you are now insolvent (you owe more than the value of your assets), and full payment is unlikely.
- You no longer have insurance for the automobile.
- You refuse to let the bank investigate the property altogether.
Under what circumstances is it considered a wrongful repossession?
Any time the repo man repossesses your property while “breaching the peace,” it is considered a wrongful repossession. An action is considered a “breach of the peace” when it is violent or done with force. This being the case, the following are some common illegal actions done by repo men:
Breaking into a garage with a duplicate key to seize the property.
Taking the property after you or a family member objected.
Using abusive or threatening language.
I have a Citifinancial, Beneficial, and Household loan all secured by electronic equipment in my home (television, stereo, etc). Do I have to let the repossession agent into my home to seize it?
No, but you will have to let the sheriff with a court order into your home (if this happens of course).
Is a bank required to send me a repossession or debt collection letter in advance that they intend to take my motorcycle?
Whether it is a motorcycle, truck, or car in most states and in many contracts notification is required prior to repossession.
Does the bank have to win a lawsuit in court before being able to repossess my automobile?
In most states the creditor is not required to win a judgment prior to repossession. The only two states that it is required to PayingPaul’s knowledge are Louisiana and Wisconsin.
Is it possible to get the property back after it has been repossessed?
In some states you are reserved the right to reinstate the original contract. Reinstatement involves making up any missed payments, plus penalties and repossession costs, and then continuing payments as usual. You can also get the property back by attending the repo auction and bidding on your property. (We are not sure why anyone would do this, but it is worth mentioning). In most states, you can redeem the contract by paying the full loan balance plus repossession fees.
Even if my state does allow reinstatement, are there situations when I cannot get the property back?
Yes. The most common ones are a) you lied on your credit application, b) you already reinstated the contract before, c) you hid the property or d) you did not take care of the collateral properly and therefore the value has decreased dramatically.