My car has been repossessed. Now what?

The repossession of a car is more than an unsettling moment that creates inconvenience. The damage to your credit report is catastrophic, especially if you want to finance another vehicle. You want answers to the “why’s” and “how’s.”

Isn’t it my vehicle?

The car you have been making payments on may be in front of your house, but it does not belong to you. If you don’t have the title or it lists a secured interest, the bank owns it until you pay it off and secure the title or release of the lien.

What if I have trouble making payments on time?

Communication is key. If you are falling behind on payments, you should inform the lender of your financial problems. Informing the finance company ahead of time may help, but they can still take it without notification or a court order.

My car is about to be sold. What are my rights?

The bank is required to notify you when your car is being sold at auction. You do have the option to buy back the vehicle for the balance owed plus expenses for repossession and storage. You also may have the option of reinstating the loan by taking care of the past due balance plus expenses.

What are voluntary and involuntary repossessions?

Involuntary repossession involves the bank sending a third party to seize the car. Voluntary repossession means that you can take the car back, avoiding bank fees and towing expenses. You will save money, but repossession will still show up on your credit report.

What is a deficiency judgment?

Most cars are sold at auction for less than the contract balance. You can be billed for the difference and demand immediate payment. Ignoring the debt could lead to a judgment against you for all costs plus legal fees.

How can I finance a new car?

The repossession will be on your credit report for seven years. Most subprime lenders require repos to be a year old to even consider an application.

Proactive steps can help delay or prevent car repossession. One strategy is to consider a bankruptcy filing to keep a highly important and valuable asset.

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