Advice on loan payments after reposession - The Bills.com Blog
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Advice on loan payments after reposession
Question: Do you half to pay any money on the truck if the truck gets repoed because of missed payments?
Answer: When a vehicle is repossessed, the lender will usually sell the vehicle at auction, then apply the money received at auction to the balance owed on your auto loan. If the lender receives less money at the auction than you still owe on the vehicle, the difference is calleda deficiency balance. Generally speaking, you would be liable to the creditor for the deficiency balance, which means you will probably still owe money to the creditor even though you no longer have the vehicle. The creditor may be willing to negotiate a repayment plan or lump-sum settlement with you to repay the deficiency, but if you fail to make arrangements with the creditor, the creditor could sue you to obtain a judgment against you, which could result in wage garnishment, a lien on your property, and/or bank levies, depending on the laws in your state. Thankfully, trucks tend to hold their value better than most other vehicles, meaning that you will probably owe less money as a deficiency balance than many other consumers in your position.
Because deficiency balances on automobile loans can cause a significant financial hardship, you
should work diligently to prevent the vehicle from being repossessed, if at all possible. First, you should contact the creditor to discuss options to bring the loan current, such as deferral of the missed payments. If the lender will not work with you in bringing the loan current, you should look into borrowing the money needed to bring the loan current. If you cannot borrow the money to repay your missed payments, or if you cannot afford to continue making your regular monthly payments, you may have no choice but to allow the car to be repossessed. In that case, you should contact an attorney to discuss the laws in your state regarding the collection of deficiency balances, and what options are available to you to resolve the debt. For example, many consumers whose vehicles are repossessed find that filing bankruptcy can help solve their financial
problems; I encourage you to visit the Bills.com Bankruptcy Information page at http://www.bills.com/bankruptcy/ to learn more about bankruptcy and the options available to you. In addition, if you are unable to file bankruptcy, a debt resolution program, such as debt settlement, may be able to help you negotiate a settlement with you creditor. To learn more about bankruptcy alternatives, I invite you to visit the Bills.com Debt Help page at http://www.bills.com/debt-help/.
I wish you the best of luck in resolving your financial difficulties, and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by Rosie Sandoval on Monday 5th November 2007 14:50
Hi, I have a question when the creditor reposesses the vehicle will they try and get the most money for it or do they just settle for the first person trying to buy it?
2. Posted by Nate on Tuesday 6th November 2007 07:19
On a reposession, the creditor has the obligation to sell the asset (usually a car) at a market value. You can usually contest this, as a market value means that anyone interested has to have the ability to bid on that. If they sell it for too low (in your opinion) you can contest the debt that is owed after the sale (called a deficiency balance). BUT - in practicality they almost always want to sell it for the most possible, so that they can get a chunk of their money back. I hope that is helpful.
3. Posted by Mary Pitts on Tuesday 18th December 2007 08:42
I know someone who has had their car in repossession since last year.. they didn't know it was in repossession status. Meanwhile this person has been making monthly payments, automatically drafted from the bank account. This person got a one month deferral last year on their payment and ever since, the payments have been 1 month behind.. can the lender repossess the car under these circumstances? There has been no notification of repossession. The lender has simply accepted the payments every month
4. Posted by Sam on Wednesday 19th December 2007 06:16
Given the situation you describe in your question, I do not think that the lender would legally be able to repossess the vehicle. In most states, a lender is required to provide a borrower a notice of default and right to cure before it can proceed with repossession. If your friend never received a notice of default, the lender probably has no intention of repossessing the vehicle. However, to prevent any potential problems, your friend should contact the lender and arrange to make a double payment one month to bring the loan current, if he can afford to do so. If he cannot afford to make a double payment, the lender will likely allow him to increase the monthly loan payments to pay down the delinquency over a period of time. While I doubt that the lender will take any action to repossess the vehicle, I still think it wise to contact the lender to discuss the situation and prevent any potential problems in the future.
5. Posted by Jeanette on Wednesday 30th January 2008 14:04
I'm behind in my payments by 1 month, and I HAVE 6 MORE PAYMENTS LEFT AND THE CAR WILL BE PAID OFF. I'm getting threating calls telling me that they are processing the paperwork to have my car repo'd Is this legal I live in the state of Missouri. Thanks
6. Posted by Nathan on Wednesday 30th January 2008 16:57
Please keep in mind that as long as the finance company has the title to your car, and if you default on your payments, they have the authority to repossess your vehicle. Usually most finance companies do it after 60 days of non payment, but it can be as early as 30 days. You will need to refer to your contract to see what the terms are.