Can I request the deficiency balance statement after my car has been sold?
I am in upside down with my vehicle. I owe 8,200 and its worth only about 3,000. I tried to get JP Chase Auto to refinance to drop my payment but they stated I'm in a second chance loan and they only give you once chance to change your due date or extend your loan. I have used both already. I have went a credit union and a car dealership both said I owe too much for them to help and to complicate matters I have to add my 19 year old son to my insurance which make it unaffordable. I have to keep full coverage on my car which at 450.00 a month, plus car payment that's my whole check. I want to voluntary repossess the car but I want to know do I have the right to ask for written evidence of how the car was sold for and what I owe?
Generally speaking, after a vehicle is repossessed it is auctioned off. The proceeds from the auction will go towards paying the outstanding balance and fees. Any remaining balance, as may be the case for your situation, is considered a deficiency balance. A creditor or collection agent will typically send you a letter with the deficiency balance. This letter normally includes information pertaining the amount the vehicle was auctioned for. Yes, you can request this statement, however it is very common for the creditor or collection agent to be aggressive and send you the paperwork. Below I will provide you with more information pertaining to voluntary 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.
If you are thinking about voluntary repossession and struggling with debt burdens, I would start out by suggesting that you get a no-cost debt relief quote from one of Bills.com's pre-screened providers.
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. A repossession will appear on a credit report for 7.5 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. (Watch the Bills.com video Credit Score Advice to learn more about your credit score.)
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.
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, Bills.com 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, and hope that the information I have provided helps you Find. Learn. Save.
Struggling with debt?
Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q2 2022 was $16.15 trillion. Auto loan debt was $1.50 trillion and credit card was $0.89 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
The amount of debt and debt in collections vary by state. For example, in Arkansas, 35% have any kind of debt in collections and the median debt in collections is $1553. Medical debt is common and 18% have that in collections. The median medical debt in collections is $561.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.