Advice on auto loan default

I defaulted on my auto loan. The bank sent me a notice demanding full payment. What can I do?

I defaulted on my auto loan, which has a $12,000 balance. The bank just sent me a notice demanding payment in full. Is there anything I can do to avoid paying this full amount, as I don't have the money to do so? Is there a way I can work something out to continue making payments? I was jobless for a month, but can afford the payment again.

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Bill's Answer
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Call the bank to discuss the options available to bring the loan current. Now that you have found a job and can afford the make the payments going forward, I would be very surprised if the bank is not willing to work with you in catching up on the payments. Since you were only out of work for one month, I assume you only missed one or two payments, so bringing the loan current should not be too difficult.

Again, I would be very surprised if the lender is not willing to work with you in resolving the default -- both the creditor and debtor lose money in a repossession.

If the lender is not willing to work with you, the only alternative I can see would be to borrow the money to bring the loan current. Depending on your credit, you may be able to go to your bank or credit union and ask for a small loan to repay the missed payments. If your credit is problematic, you may need to ask your family and friends for help bringing the auto note current.

If the vehicle is repossessed, you will not only be without a vehicle, but you will probably also still owe the finance company a lot of money as a deficiency balance. When a car is repossessed and sold at auction, the finance company applies the money it receives at the sale to the balance owed on your loan. If the vehicle sells for less than what you owe, you may be left owing the difference.

As I mentioned, I expect your finance company will work with you to bring this loan current, but if they will not, you should explore all options to borrow the money to bring the loan current, since a deficiency balance can be a huge financial burden.

If you absolutely cannot afford to pay for the vehicle, consider voluntary repossession as a lower-cost alternative to involuntary repossession.

I wish you the best of luck in resolving this problem, and hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

Bills.com

46 Comments

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  • 35x35
    Jan, 2011
    Lisa
    My divorce settlement stated that my ex-husband would be responsible for the debt on the car he drove, despite the fact that the car was financed/titled in my name. He stopped making payments and the car was repossessed. He settled with the bank for an amount less than what was owed. I am trying to refinance my mortgage (and would benefit from a higher credit score)and have been told by the lender that I could possibly contact the bank and speak with a supervisor to see if they would be willing to remove the account from my report if I provided them with copy of the divorce settlement. The car loan was through Bank of America. First, have other people been successful with this and second, what department would I need to contact? I envision having to explain my situation to a number of customer service reps before getting to who I need to speak to. Or would it be best to write the bank? Would really love to fix my credit score if possible. Thanks!
    0 Votes

    • 35x35
      Jan, 2011
      Bill
      While you can try contacting B of A to request that you no longer have the car repo show on your credit, it is up to the creditor to decide to honor your request or not. I have no guide for judging the likelihood of your success. Even though your divorce decree stated that the debt is your ex's responsibility, that does not mean that the creditor is bound by you and your ex's agreement to divide community assets and debts. The creditor may consider you equally responsible, even if you were not pursued to collect on the debt, and be unwilling to remove the account from your records. I think it will take time and patience to call and find the right person to speak with, but I think phoning is likelier to get you somewhere than writing. Have you looked at the steps you can take to improve your credit score?
      0 Votes

  • 35x35
    Oct, 2010
    Joe
    A friend of mine son lost his job over a year and a half ago, and is about that far behind in his car payment. The dealer closed that location, and has not had any contact with the finance company. How can he find out who to call to turn the car in to? After it is turned in, what will happen as far as the balance? From what I have read in other posts, I assume it would be auctioned off, that would be applied to the balance, and he would have to find a way to pay the rest? Is there any leagal action that the finance company can/will take?
    0 Votes

    • 35x35
      Oct, 2010
      Bill
      The finance company would be a great place to start. A less accurate information source to learn current creditors is a consumer's credit report. A repossessed vehicle will be sold at auction, and any deficiency balance is the responsibility of the borrower. The creditor has the right to collect the deficiency balance from the borrower, including using the court system.
      0 Votes

  • 35x35
    Jul, 2010
    Bill
    A) Yes. B) No, unless you are in financial distress. The creditor may not be able to repossess the vehicle, but you still have personal liability for the loan. Negotiate a lump-sum settlement with the $8,500 you receive.
    0 Votes

  • 35x35
    Jul, 2010
    Jason
    I have a 2004 Passat. I paid the car off, but then used the car as collateral for an investment loan 3 years ago. The investment fell through, but to the point, I just got notice from my insurance company that the car is totalled after a flood here in Houston. The remaining balance on the investment loan is $14k. The insurance company will give me $8500 (after strong negotiating). A. Will the insurance company need the title to total it? B. Do you recommend defaulting on the loan? There is no longer collateral on the loan since the car is totalled. C. Everyone has their own sob stories, but my wife left me when I moved down here, I now have child support payments (.47 on the dollar of net pay), and have no money to pay off the rest of the loan. I'm working at with great income, but my sister messed up my credit when I cosigned with her on her car and she is in repossession.
    0 Votes

  • 35x35
    Feb, 2010
    Bill
    I am not aware of any statute of limitations on a secured debt, which is what a title loan is. Readers, please reply below if California has an exception for vehicle title loans.
    0 Votes

  • 35x35
    Feb, 2010
    Tenna
    Can you tell me if there is a Statutes of limitations on a Auto Title loan in California? And if so what it is? I've been looking around online for this information. I'm sure I am looking in the wrong spot.. If you can help that would be great!
    0 Votes

  • 35x35
    Jan, 2010
    Alicia
    Thank you Bill for your quick response. I am living in the state of NY. It has been about 2yrs since the Chapter 13 case was dismissed and have not yet proceeded to Chapt 7 status because I am still unemployed. I will take your advice and contact an attorney. Alicia
    0 Votes

  • 35x35
    Jan, 2010
    Bill
    It is difficult for me to offer a useful answer because you did not include your state of residence in your message. You also did not include the status of your Chapter 13, and if it is now a Chapter 7 due to your loss of income. Regarding the vehicle title, you may be able to obtain what some states call a "bonded title" for vehicle the creditor has abandoned. I urge you to consult with an attorney (your bankruptcy attorney would be a good person to consult) before undertaking this procedure. Alternatively, ask the finance company for the procedure. However, before taking any action of this magnitude consult with your attorney first.
    0 Votes

  • 35x35
    Jan, 2010
    Alicia
    My dilemma is that I was not able to afford my car payment so I filed Ch. 13 -debt consolidation in order to get on track with my bills. I since then lost my job and called my finance company to return the vehicle and they said they don't want it back and that it was tied up in litigation, also I have not received any correspondence from them since I bought the car. The last time I spoke with them was in Dec. 09. I don't know what to do. It has been sitting in my driveway for the past 2 yrs not registered or being driven and they have not picked it up. What do I do with it? I would like to sell the vehicle but I lost the title and the finance company also refuses to give me a copy.
    0 Votes

  • 35x35
    Jan, 2010
    sheri
    thank you for your advice, i think i might have to do that until these auto loans are paid in full. also my credit score is only showing 530 due to the surrender of the 1 truck.if i would of known someone was gonna steal my truck i would of never gave up the other one now i am paying for 2 trucks i no longer have, because i dont want it to affect me later on in life.
    0 Votes

  • 35x35
    Jan, 2010
    Bill
    Impossible for me to speak on behalf of lenders. When considering a loan to a consumer, a bank looks for three qualities in a potential borrower: 1) Credit history; 2) Stable income; 3) Debt-to-income ratio. The voluntary repossession is a negative mark on your credit history that you may be able to overcome if it was in the distant past. You did not mention your income or DTI so I cannot speculate if you make an attractive customer. One thought: Avoid a loan. Instead, buy a used vehicle, pocket the savings, and when you have enough in the bank buy something more to your liking with cash.
    0 Votes

  • 35x35
    Jan, 2010
    sheri
    I recently had my car stolen and totaled my insurance paid the value of the car and i am paying off my defiency as agreed. also before this happened i owned another truck that i voluntary surrendered because i didnt want 2 truck payments and also i am paying that defiency as agreed monthly. can i still get approved for a auto loan right now since my second truck was stolen and totaled.
    0 Votes

  • 35x35
    Jan, 2010
    Bill
    If you can no longer afford the monthly payments, you don't have many options. The only way you can keep the car is by not defaulting on the loan. If this is not a possibility I recommend consulting a licensed bankruptcy attorney in your state.
    0 Votes

  • 35x35
    Jan, 2010
    kyle
    i have an 06 kia that is not under warranty anymore and the engine is shot now do to timing belt failure...i stil, owe like 16,000 due to past loans that got added on... i was wondering if there is anything i can do to not get a repo or fully default on my loan and i owe to much to trade right now... i heard from someone that there is some chapter or law that may cover me...is this true???
    0 Votes

  • 35x35
    Dec, 2009
    Bill
    Contact the creditor and tell them that you realize you are behind on your payments, you are expecting to start work soon, and you will resume payments as soon as you receive your first paycheck. Honda wants your money, and not your car. It will be in Honda's best interest to work with you as you get back on your feet again.
    0 Votes

  • 35x35
    Dec, 2009
    Mike
    I financed thru Honda and they have been very hard to deal with. My loan is charged off but of course I know that is not the end of it. I am not working but chances of a job before the end of the year are promising. Once I am working how can I negoiate with them so I can stop looking over my shoulder every second for the repo man. No car no job so I need to work something out as soon as I am able but in the past I was told they don't even have the authority to help. Any suggustions?
    0 Votes

  • 35x35
    Nov, 2009
    Bill
    I would need to see your truck loan documents before answering your question yes or no if they have a non-judicial remedy of seizing your truck for your failure to stay current on your credit card and what sounds like a signature loan. I suppose it would be possible for such a remedy, but it would not be conventional. In general, the credit union (or any other creditor) has the option to file a lawsuit against you for a breech of contract if you fail to repay a loan. The credit union could receive a judgment, and with that judgment in hand, could place a lien on your property including any vehicles you have titled in your name. Regarding the bankruptcy, your attorney is your best resource for information. I do not know your state of residence, and bankruptcy exemptions vary by state.
    0 Votes

  • 35x35
    Nov, 2009
    Janeen
    I have a truck loan with a credit union here in N.Y., I also have a Visa card that is maxed and another type of loan (like a home improvement loan) anyway, I am always on time with the truck loan, the other two have not been paid in months. I was laid odd from work in August and plan on goibg chapter 7 bankruptcy. The CU says that even though I am current with the truck loan, they ciuld repo it as collateral for the other defaulted loans. Is this true? I a have retainer an attorney and still owe him more $ towards the retainer but can yu tell me? I would be keeping the truck seperate alomg with my mortgage from the bankruptcy. Should I just see if I could borrow $ and pay it off? Then could they STILL take it even with bankruptcy protection? Please let me know......Thanks-J
    0 Votes

  • 35x35
    Oct, 2009
    Bill
    Please talk to a Wachovia customer service representative and ask them for an explanation, because I do understand how or why Wachovia would "unsecure" a vehicle loan. When you learn the answer please let us know.
    0 Votes

  • 35x35
    Oct, 2009
    Jennifer
    I am trying to work out payment arrangements on my auto loan with Wachovia. As of the end of the month they said the loan will no longer be secured. What does that mean? Will they try reposession immediately?
    0 Votes

  • 35x35
    Oct, 2009
    Kayla
    I did not default on my loan. It's just that i feel that there were some wrong doing with the loan agreement. Is there someone i can have take a look at the contract. And voluntary repossession goes against me big time, so i really don't want that.
    0 Votes

  • 35x35
    Oct, 2009
    Bill
    Take your loan documents to an attorney with experience in consumer law or contracts law.
    0 Votes

  • 35x35
    Oct, 2009
    Bill
    First of all, keep in mind that the finance company has the right to repossess the vehicle even if you are only 30 days past due. You state that you are about 60 days behind already, so they might already be on the lookout for you car. Secondly, you cannot sell the vehicle without clearing out the loan first. I cannot tell you directly what to do, but through my experience, I can tell you that i am not surprised that your efforts to negotiate are falling on deaf ears because negotiations only happen after about 3-6 months of delinquency. Another important fact that you have to keep in mind is that if you let them repossess, you will be liable to pay both the loan balance and the repo + storage fees. Continue your efforts to negotiate with the folks in customer service. It might seem like you're talking to a wall, but in instances such as yours, persistence pays.
    0 Votes

  • 35x35
    Oct, 2009
    Latoya
    Good Morning Bill, I feel a little rusted today. After going back and forth with the bank on the phone last night and this morning, it doesn't seem like they are going to budge for my offer. I owe 10K on the car. I told them that the dealer would buy it for $4,000 and I could come up with another $2,000 to equal $6,000. Which is 60% of what I owe and that is the market value of the car. So the account manger, who I defintely figured out was being couched by his supervisor really had no pull at all by the end of the day. He claimed he's been fighting for me, but I don't believe it. After being on hold for a few, he finally came back with a figure and stated that they would shave 10% and bring the balance down to $9,000. So if I can get $4k for the car, then I would still have to pay the remaining balance of $9K. How do you like that. He told me that his boss could not accept the $6k I originally offered. And I asked to speak to his supervisor and he said that they are going to tell me the same thing. Most banks want 90% of what they loaned out and he never seen his manager settle for less. Wow! So now he is saying I have till Oct. 28th to make a payment or the contract for this loan will terminate and they will need to collect my car. (Yeah, not if they can't find it). So now I am in a tough spot here. I don't want to keep the car, but I can't come up with any addtional $5k to fufill the loan. I explained to them, I am going to continue to struggle with my payments even if I keep the car because I am not working. So bascially eitherway they are going to get their money if they repo it. What should I do? Should I try and get up the funds for this month so my contract won't get terminated? Technically it will only be 60days that I have been pass due. Maybe, Wachovia doesn't do the 120day rule. Or should I wait them out and offer them the original option, which is settling for the $6k? Any ideas is helpful.
    0 Votes

  • 35x35
    Oct, 2009
    Bill
    Excellent news about your creditor showing some flexibility in dealing with your vehicle loan. You have a good plan for dealing with a tough situation, and now it is time to follow-through now that your creditor is aboard in principle. Regarding your question about how to sell it, I think you may be proceeding from a false assumption. Generally speaking, when a vehicle transaction occurs between private parties, the vehicle is sold as-is. "As-is" means both parties understand there is no guarantee or warranty aside from a) the seller promises the title is clear, b) the odometer is accurate, and c) the buyer's check doesn't bounce. I have had good luck buying and selling cars on Craigslist. Review a dozen or so posting before you write your own posting so that you can see what makes a good one. Post a half-dozen or so clear photos of your vehicle, and err on the side of disclosing more information than less in your posting. Price your vehicle according to what you find on Kelly Blue Book. I urge you to deal with local buyers only and beware of any oddball offers that sound fishy or too good to be true. In other words, use your common sense. You mentioned CarMax. I do not have any experience with that company, and as a result do not have any opinion on the company. You also mentioned an auction. The advantage of an auction is that you will sell your vehicle quickly. However, you will not get the best price because the auction price is, in effect, the wholesale price. Selling it yourself generally results in a higher price. Regarding your credit report, what the creditor proposes sounds fair. Finally, I am glad you are keeping us updated on your progress -- please keep it up!
    0 Votes

  • 35x35
    Oct, 2009
    Latoya
    Good Morning Bill, I wanted to give you an update on my call to Wachovia Bank regarding my car. I finally got through the customer service line and then to the account manager. It wasn't easy at first because like you said the customer service rep was sticking to the script and was trying to find out if I could make a payment by credit card, etc. After explaining to the rep that I have been unemployed for 3 months and my unemployment had not come in, the rep still refused to pass me through to a supervisor. So I hung up and called back again and explained the same thing to another rep and they finally passed me through. I spoke to an account manager and explained to him that if there was another way to make payments or options. He nicely said that he understood my situation and because I have been in good standing, they want to work things out with me, not having to go through a repo. He asked what would I like to do. So I explained to him about selling the car for market value. He responded by saying that it was an option. If I can find a buyer, to call him back and see how much I can sell the car for. I owe 10K on it and I know that I could possible get it for $5k tops. So if I can get it for that, I will call back and see what the bank will be open to accepting. Also, do you have any recommendations on where I can sell it? Because I don't want to sell it to an individual and be responsible if something breaks down on it a month later and I get harassing calls. So I was thinking either taking it to CarMax or an auction. Also, if I get an offer for $5k, and call the bank and they want more, what do you think the next step I can take? For instance they want $7K. Do you think I can negotiate down to like $6k, worse case? I will just call around the family to gather up the difference to make the remaining amount. Also, so that I can get my credit in the clear, I also mentioned to the account manager that if we settled on an amount that they would write this off on my credit report at "paid". Is this the correct method? If so, I should I am assuming to get this in writing before I send the money. Thanks again! I will keep you posted. Best,
    0 Votes

  • 35x35
    Sep, 2009
    Bill
    Generally speaking, creditors handle delinquent customers in the manner in which you suggest. If you are current, the front-line call-center people stick to the script that is displayed on their compute screens -- "Please pay us now," is what the script reads. If the creditor is enlightened and the managers of the current-customer call center have the authority, they can negotiate different terms. (That's why I suggested initially that you talk to a manager with your offer.) It appears that your creditor is more rigid and the current-customer call center has a no-negotiate policy. At this creditor, negotiations are handled by a different call center -- the one that handles delinquent customers. The delinquent call center has more flexibility in dealing with customers. Again, it depends on the creditor's policies and the customer's history. If the front-line personnel are not willing to deviate from what they are reading on their computer screens, then ask to speak to a supervisor who may have the authority to override that call-center's policies. As you have found, your creditor seems to have an inflection point when an account is 30-days past due. My guess (note my word choice) is that the next inflection point is at about 120 days. This is near the time where creditors are required to write-off an account, which simply means it is no longer a current debt. However, given that this is a secured debt, the creditor has the option to repossess your vehicle. Again, you have nothing to lose by continuing to try to negotiate a settlement with them. Regarding finding a job, the labor market is still tough, but if you can find a full-time job, take it. I have always found it easier to find a new job when I'm already working. Please continue to keep us informed of your progress.
    0 Votes

  • 35x35
    Sep, 2009
    Latoya
    Good Morning Bill, I don't know if you remember my story. but I it was posted to you back in July 28th. Regarding my carnote. I owe $10,000 on my car and was layed off back in June. I paid my note in August. However, I told you that I wasn't sure if I would be able to make Septembers payment. So I called in advance probably, August 30th and at that time. I asked to speak to a manager and after speaking with them, she stated that since I have been in good standing that there was no options for payment. However, they would give me 30 days (till the end of September) to make the payment. If I couldn't then to call them back before the end of the month. My original proposal I told you about, was to ask them if I could sell it for market value and make $6-7k on it, send in another $1000 so that they could make the majority back on the car. Also, it would be beneficial to them to let me get the most for the car instead of having them repossess it. Also, that if we were able to come to these kinds of terms, I would also want my credit report to state that it was "Paid". So my question for you is should I go delinquent to start the negoations? How high of a risk am I taking going this route? It's almost like they want me to default and get in bad standing in order for them to offer payment options or any type deal. Also,I was thinking maybe I can send this months payment, try to find a full-time job before the end of October and trade the car in. I found that alot of dealers are not handing out loans to people with a part-time job. Eitherway, my main goal is to get rid of the car. It's costing me too much to fix. I know that was alot of info and I appreciate you insight and feedback. Thanks again!
    0 Votes

  • 35x35
    Jul, 2009
    Bill
    You are very wise to be thinking ahead on this issue, and I commend you for that. You have nothing to lose by calling the lender and pitching them that offer. Keep in mind that the first person you get on the phone will not have the authority approve your offer, so you may have to go up the chain of command before you receive a definitive answer. Before you call, take a look at Debt Negotiation and Settlement Advice to learn a little more about the negotiation process (although it appears you are a strategic thinker and may not need the advice) and negotiating tactics. You might want to impress on the lender that repossession is an expensive process, and it would be cheaper for them in the long run to accept your offer.
    0 Votes

  • 35x35
    Jul, 2009
    Latoya
    Hi, I was recently laid off and will be making alot less and I havn't gotten approved for my unemploymentyet, so I don't know if I will be able to continue making my monthly auto payments. However, I haven't been late on my auto payments ever (3 1/2 yrs.), and I will be able to pay next month (August), but don't think I will be able to after that. So just in case, I want to prepare myself and call ahead and let the bank know my situation. What approach should I take? For instance, the total payout amount is $10,900 and I was wondering if I could ask them (Wachovia) if I could sell it the best market value ($6,000-$7,000), send in another $1000 (borrowing it from a family member or credit union),totaling a final pay out of $7,000 or $8,000 and to have them leave my status as "paid" on my credit report. Also, issuing the title to the new owner once it's been sold. Do you think this can be done? I have been unemployed for just a month, but I don't think things will pick up any sooner and so I just want to stay on top of this, find out my options, just in case it goes bad and I don't find work. thanks
    0 Votes

  • 35x35
    Apr, 2009
    Bill
    If you let the car go (voluntary surrender), the lender will auction it and apply the proceeds of the sale towards the loan. if the amount is not enough to cover the loan, the lender will still come after you for the balance, and will report this unpaid debt to the credit bureaus.
    0 Votes

  • 35x35
    Apr, 2009
    DALE
    I am behind in my loan for my car, i refinanced it 4 months ago and with it wells fargo added some credit card debt in with the note, Since the economy has slowed down my monthy income has dropped about 1000.00 a month, so with rent,food,child support and things that Have to be paid I am behind. I am trying to sell the car so I can get rid of it, the problem is since the refinance rolled the other debt, I owe alot more than the car is worth, is it out of the question for them to settle the loan for a lower amout?...I have another car that is paid for so I really dont need the car. I almost just want to let the bank have it but what happens if i do that?
    0 Votes

  • 35x35
    Mar, 2009
    Nithin
    Anita - Didn't your insurance company cover atleast part of the loss? Lenders selling past due accounts to collection agencies is a normal practice. What is hard for most consumers is to negotiate with those debt collectors. At first, it might seem that the debt collectors are rigi and inflexible, but if you know your rights, you can eventually work out a payment plan. I suggest that you write to them, explaining your financial condition and propose a repayment plan. Please make sure that you maintain all records of dealings with them. Persistence is key. Don't let the collectors scare you with their threats. If they decide to sue you, you can still argue for your cause in court. You should also read up on the Fair Debt Collections Practices Act at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf
    0 Votes

  • 35x35
    Mar, 2009
    Anita
    What is my options for auto default do to a car being totalled in an auto accident? My credit is poor and none of my family members have 2500 dollars just laying around. I live pay check to pay check and have two small children to take car of. I have 63000 in student loans that have been deferred, but that still doesn't allow me the extra income to pay the same amount of payment for a car I can't drive. I have tried to get the company to work with me and they refused and written the load off but sold it too debt collection agency.
    0 Votes

  • 35x35
    Jan, 2009
    Bill
    I am not clear what you mean when you say "debt cancellation". There is no program like that. If you are referring to debt consolidation, then there might be certain programs that can help her, but it would be complicated until her divorce is finalized and the responsibility on the debts has been decided. I suggest that she get a free consultation from a debt counselor. You can get one by visiting www.freedomdebtrelief.com or call them directly at 1-800-544-7211.
    0 Votes

  • 35x35
    Jan, 2009
    d.dyer
    my friend has forclosed on her home and defaulted on second mortgage. She has filed for divorce and co-signed a auto loan which her ex defaulted. I have tried to tell her she has to pay debt cancelation on all mentioned defaults, does she have other options.
    0 Votes

  • 35x35
    Dec, 2007
    Park
    Thank you for visiting the Bills.com blog page. The bank writing the car off as uncollectible is mainly done for tax benefits. At any time, within the statutes of limitations, the bank still has the right to collect on this bad debt. Just because the loan was labeled uncollectible on your credit report does not mean you have the right to the title. The title will remain with the bank until the loan is satisfied.
    0 Votes

    • 35x35
      Jul, 2011
      Amy
      We had a loan through crescent bank of Louisiana. The car broke down and we could not afford to fix it. We asked the bank to pick up the car but they wouldn't. We stopped making payments a year ago, still have the car, have heard from no one, the dealership went out of business and credit report shows they wrote it off as a loss. We have no idea what to do with the car. We live in Texas.
      0 Votes

    • 35x35
      Jul, 2011
      Bill
      If you don't have the title to the car, you can't sell it. I think your best course is to hold on to it and wait to see if anyone pops up trying to collect on the balance you owed.
      0 Votes

    • 35x35
      Aug, 2011
      Dan
      I have a 2003 Kia Spectra which got involved in an accident in Nov. of 2005. At that time I was late on my loan payment. The insurance company wrote out a check to me and the bank for $1700 for the repair but the bank refused to sign off on the check until I got the loan current witch I could not afford to do. The loan ended up defaulting, I never was able to cash the insurance check and no repo or collections attempt was every made. So I have had a 2003 Kia Spectra with a damaged front end that has been not drivable for the last 6 years. The insurance company's tax office just contacted me about the un-cashed check, saying that I could claim it and they would send me a draft (with my banks name on the payee line as well). My credit report says the bank wrote the loan off as bad debt. At this point is there any way for me to get the title or the insurance money without opening up a potential hornet's nest from an old debt? I live in Maine.
      0 Votes

    • 35x35
      Aug, 2011
      Bill
      It does seem to me that you would have to get the bank to issue a new check, even if you have the old one, so your caution is well placed. Just because the bank charged-off the debt, it does not mean that they can't try to collect on it. You don't want to raise a red flag, especially if the statute of limitations has not passed on the debt.

      While I applaud your caution in considering if you may create more problems than you will solve if you try to cash the check, I can't give you legal advice and my opinion as to what your options are is worth what you pay for it. The best advice I can give you is to consult with an attorney.
      0 Votes

    • 35x35
      Aug, 2011
      Dan
      Thank you for the prompt response. Just to clarify, the insurance company WILL reissue the check to me with no problem, but with the lien holder (Androscoggin Bank) name as a payee. I only owed about $2800 on the car. Is it probably that that Androscoggin Bank might let me sign the check over to them and apply the $1700 towards my debt? It would be worth it to me, I think, to pay off the remainder in that case to obtain the title and get the debt marked as paid.
      0 Votes

    • 35x35
      Aug, 2011
      Bill
      I am very confident that the bank will allow you to apply the $1700 towards the debt.

      Perhaps you would be best served to contact the bank and propose a settlement, where you offer the $1,700 (or even less if you wish) to clear out this old debt. Ask for a pay for delete, too. You may be able to clear the debt and get it off your report without putting any money towards it other than the funds from the insurance company.
      0 Votes

  • 35x35
    Dec, 2007
    William
    I defaulted on an auto loan 18 months ago and the bank wrote off the note as "uncollectable." I still have the car, but how do I obtain the title? Thank you.
    3 Votes