Your One Stop Resource for Saving Money.
Voluntary Repossession Effect on Credit Score - The Bills.com Blog
Bills.com Blog > Debthelp Questions > Voluntary Repossession Effect on Credit Score
Voluntary Repossession Effect on Credit Score
Tuesday, Sep 29, 2009
Question: I am currently going through a divorce and my ex-husband and I agreed he would continue to pay on our auto loan for our Jeep Laredo. He is not making the payments. He is driving the car and my name is also on it. Will my credit be hurt badly if I have it voluntarily repo'd?
Answer: As co-signer, you are liable for the car payments if your ex-spouse stops making them. In other words, if your ex stops making the car payments, your ex is obligating you as co-signer to make them. If neither of you make the car payments, both of you will see damage to your credit scores, and both of you are liable for the deficiency balance if the car is repossessed. A deficiency balance is the balance remaining on the loan after the finance company auctions the repossessed vehicle.If the car is repossessed, the repossession will appear on both of your credit reports for seven years. A repossession is seen as a significant event, and it will cause a great deal of damage to your credit score. More importantly,
it is a warning flag creditors watch for when deciding whether to give a person a loan, especially if the repossession was recent. As a result, you should avoid a repossession if possible.
Talk to your co-signer now if you are still on speaking terms. Explain the situation and the consequences. Perhaps you can work out an arrangement where you both contribute to the payments for a short time while your ex gets himself back on his feet again. The alternative is that when your ex stops making the payments, the creditor will start hounding you for the payments. By working out an agreement now (which I realize may not be a pleasant conversation),
Talk to your co-signer now if you are still on speaking terms. Explain the situation and the consequences. Perhaps you can work out an arrangement where you both contribute to the payments for a short time while your ex gets himself back on his feet again. The alternative is that when your ex stops making the payments, the creditor will start hounding you for the payments. By working out an agreement now (which I realize may not be a pleasant conversation),
you may prevent the situation from becoming a disaster for both of you.
If your ex-spouse is unwilling or unable to make the payments, an option to you is voluntary repossession. The only benefit to you is that voluntary repossession results in lower fees than the classic involuntary repossession where a repo-man snatches the vehicle in the dead of night. However, both co-signers are liable for the deficiency balance and there is no difference reported on credit reports.
See the Bills.com resource "All about voluntary repossession " for more information.
I hope this information helps you Find. Learn & Save.
Best,
Bill
www.bills.com/blog/
If your ex-spouse is unwilling or unable to make the payments, an option to you is voluntary repossession. The only benefit to you is that voluntary repossession results in lower fees than the classic involuntary repossession where a repo-man snatches the vehicle in the dead of night. However, both co-signers are liable for the deficiency balance and there is no difference reported on credit reports.
See the Bills.com resource "All about voluntary repossession " for more information.
I hope this information helps you Find. Learn & Save.
Best,
Bill
www.bills.com/blog/
Also, make sure to get a free financial health check-up with Bills IQ!
Submit questions/comments about this post:
Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!
Information provided by Bills.com is for general informational purposes only and is not be
construed as legal, financial, bankruptcy, tax or other professional advice. Should you
require more detailed information or specific professional advice tailored to your situation you
should consult an attorney, financial planner or tax advisor.
While we believe all information provided by Bills.com to be accurate as of the date of its posting, we cannot ensure its accuracy. Use of this site and any information contained on or provided through this site is provided without any representations, warranties or guarantees. Bills.com is not responsible or liable for any decisions or actions anyone may take based on the information provided. Please see Terms of Use.
While we believe all information provided by Bills.com to be accurate as of the date of its posting, we cannot ensure its accuracy. Use of this site and any information contained on or provided through this site is provided without any representations, warranties or guarantees. Bills.com is not responsible or liable for any decisions or actions anyone may take based on the information provided. Please see Terms of Use.
© 2006 - 2009Bills.com LLC. All Rights Reserved.