Voluntary Repossession Effect on Credit Score

My ex agreed to make car payments on a loan I co-signed, but is not. How badly will a voluntary repo hurt my credit score?

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?

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Bill's Answer
(5 Votes)
Bills.com Team


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), 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.





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  • 35x35
    Nov, 2011
    I have a friend who is divorced from her husband, who is the primary on her car loan and she is the cosigner. She makes the payments and has always remained current but now her ex husband wants to voluntarily turn the car in to the bank to be vindictive and will not allow her to put the vehicle solely in her name. This is in the state of Washington. What are her rights and what can she do? Thanks in advance
    0 Votes

    • 35x35
      Nov, 2011
      The lender will have to agree to a voluntary repossession and will most likely not do so, if the payments are being made on time. Since she is party to the loan, your friend should contact the lender and express her preferences regarding discharging the loan in such a manner that it will not hurt her credit score, and her disapproval of a voluntary repossession. She should emphasize that she will continue to make the payments, as per the loan agreement.

      If she has any legal questions they should be directed to a local lawyer.
      0 Votes