All About Voluntary Repossession


What is the difference between a voluntary repossession and one where the vehicle is snatched by a repossession person from the auto or home lender?

What is the meaning of a voluntary repossession? Also, which affects your credit report more; a voluntary repo or a regular repo?  And, is voluntary...

What is the meaning of a voluntary repossession? Also, which affects your credit report more; a voluntary repo or a regular repo?  And, is voluntary repossession only for autos or are there home voluntary repossessions too?

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  • Learn the differences between a voluntary repossession and standard repossession.
  • Understand your responsibilities regarding a deficiency balance you will owe.
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Repossession is where a creditor holding the title to property takes possession of the property from the debtor. It is typically related to an automobile repossession, but can also apply to any asset and there is such a thing as a voluntary house repossession.

What is Voluntary Repossession?

"Voluntary repossession" is a term used to describe a situation in which a consumer voluntarily surrenders the property securing a loan, such as an automobile, to the lender that financed the purchase. Voluntary repossessions generally occur when a consumer has fallen behind on his or her loan payments, and decides to surrender the property rather than forcing the creditor to proceed with repossession. Voluntary repossessions occur most frequently with vehicles, but can occur with any type of secured loan, such as the purchase of work equipment, jewelry, etc.

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Struggling with a deficiency balance debt? Contact one of’s pre-screened debt providers for a free, no-hassle debt relief quote.

Now, onto to your questions about voluntary repossession. To voluntarily surrender your automobile or other property to the lender that financed its purchase, you would first need to contact the creditor to explain the fact that you can no longer afford your monthly payments, and that you wish to surrender the property. At that point, the lender will likely provide you with a location at which you can safely turn over the property, and tell you any details you need to know about its procedures for processing voluntary repossessions.

Do not be surprised if your creditor is resistant to your request to voluntarily surrender your vehicle; the lender will likely try to work with you to figure out a way for you to keep the loan current and retain the property. These efforts may actually help you in figuring out a way to maintain the loan. However, if you are sure that you cannot afford the loan payments, voluntarily surrendering your vehicle can be a reasonable choice.

How does a voluntary repossession compare to a standard repossession?

In regard to your credit, both a voluntary repossession and a standard repossession have the same effect on your credit rating. They will both appear as repossessions, and will both result in a significant negative mark on your credit history. Under the FCRA, a repossession will appear on a credit report for 7 years from the date of first delinquency. You will likely see your credit score drop substantially, as having a repossession in your credit history marks you as a credit risk. 

However, if you truly cannot afford your car payments and are falling behind, it is likely that your vehicle will be forcefully repossessed if you do not take the initiative to surrender it first. The primary benefit of a voluntary repossession is that the costs associated with the process tend to be significantly less than those associated with a forced repossession, which could save you a lot of money as you work to pay off the remaining balance of the debt.

Deficiency Balance

Even if you surrender your vehicle to your lender voluntarily, the lender has the legal right to collect on any balance remaining on the debt after the car is sold at auction. This type of debt is referred to as a "deficiency balance." The creditor may even file a lawsuit against you to collect on the unpaid deficiency balance. You should therefore only proceed with a voluntary repossession if you truly cannot afford the loan, as you will likely still owe the lender a significant amount of money, even after you no longer have the use and benefit of the property.

A deficiency balance is an unsecured debt, which the law treats the same as credit card debt, a payday loan, or medical debt, among other consumer debts. To see your rights and options for resolving the deficiency balance, read "Collections Advice."

For more information about credit and credit scoring, I encourage you to visit the credit help page. In addition, offers a wealth of information for consumers struggling with their debts, available on the debt help page.

I wish you the best of luck in resolving your financial difficulties.

I hope this information helps you Find. Learn & Save.



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  • J
    Aug, 2020

    I have a car that the car dealer won't come and get but now it's on my credit. What can I do with the car?

    • 35x35
      Aug, 2020

      James, does the car run? Is it registered and insured? If yes, then keep using the car. I don't think you can make them come and get it. I don't know what would happen if you drove it onto their lot and left it there. Perhaps you should to speak with a lawyer see. 

      The other two issues on your plate are the credit report issue you raised and the debt that you owe. Regarding the credit report, the history of your missed payments on the debt will remain on your credit report for 7 years. 

      The creditor can pursue collections against you for the debt. They may send letters, call, or go to court and sue you. You should try and set money aside so you can negotiate a settlement with them when they contact you.

  • T
    Jun, 2020

    Dealership manager took advantage of me an my situation an he made me false promises to me an left me with a higher car note and more debt. I can't afford my upside down vehicle and I'm thinking of going the voluntary repo route an not paying anything at all anymore bc I just cant. Who has been down this rode already or can give suggestions an advice btw my car is worth 18k an I'm suppose to pay 40k over time for it. Which is not happening.

    • 35x35
      Jul, 2020

      Tony, I am sorry to read that you were taken advantage of. Unfortunately, that is unlikely to affect the situation. The car willl be auctioned, the auction balance (less some costs associated with the auction) applied to your debt and the remaining balance your responsibility. Given the size of the debt that will still be your responsibility, I would first speak with a bankruptcy attorney, before you go the repo route.

      Secondarily, try to get something positive out of what, overall, is a lousy experience. I imagine you learned something about car salespeople and won't get taken advantage of again. I suggest you look at what caused you to buy such an expensive car. I am not judging you. I do believe you could have had reliable, pleasing transportation without a car that cost so much.

  • G
    Jun, 2020

    On a VOLUNTARY SURRENDER, am I relieved of my contract, and any remaining balances if I authorize the Dealership Financial Service to: Cancel the following items on the vehicle & apply the refund to unpaid balances of, Mechanical breakdown protection (service contract), Vehicle Service Contract, Guaranteed Asset Protection (GAP), Credit Life & Disability, and any other optional insurance. Please let me know. Thanks

    • 35x35
      Jun, 2020

      Gigi, I am not a lawyer so I can't give you legal advice, which is what your question requests. Here is my best information, but it is not legal advice.

      The best I can say is that it depends on the size of the refund and how much you currently owe on the car. They may assess some fees associated with auctioning off the car, so look into that, too.

  • S
    Sacoria Lawrenc...,
    May, 2020

    Hey I no longer will be able to make payments on my vehicle and was thinking about doing a voluntary repossession. Can they garnish my wages for doing so even if I call and try to set up payment arrangements with them?

    • 35x35
      May, 2020

      Sacoria, a voluntary repossession can lead to wages garnihsed, but there are a number of steps in betweeen. The creditor will  auction the car and apply the sale proeeds to your balance. There will likely be fees associated with the auction. The remaing amount is called the deficiency balance. You can try to work out a payment plan. If the creditor doesn't formally accept the payment plan it can sue you, even if it were taking checks you submitted and cashing them. A garnishment won't happend until after they sue you, if they sue you

  • N
    Norma Gallo,
    May, 2020

    How much time do I have to pay back the remaining balance on a voluntary Repossession?

    • 35x35
      May, 2020

      Norma, there is no set timeframe for repayment. Once the car is returned, the process usually is that the car is auctioned off and the proceeds applied to the balance you owe. Fees can be charged for the auction and processing, too. The balance after the auction and fees is called the deficiency balance. A creditor can demand you pay it off in full and sue you if you don't, agree to a certain payment plan or anything in between. A creditor can accept whatever you send for any amount of time and then sue you, unless it formally agreed to take payments of a certain size. 

      One strategy you could try is to set money aside as best you can and when you have a large lump sum to contact the creditor and offer to settle the debt for less than is owed in exchange for the money you saved. They don't have to accept it. What you do depends in part on how aggressively the debt is pursued, the statute of limiattions on debt in your state for a written contract, your ability to pay as you see it, and what a bankruptcy court would judge to be your ability to pay.

      Does this make sense to you?