Advice on auto loan default - The Bills.com Blog

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.

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.

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.

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.

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.

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

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?

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.

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

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.

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!

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.

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,

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!

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.

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.

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.

Take your loan documents to an attorney with experience in consumer law or contracts law.

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?

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.