Work With Your Lender to Avoid Car Repossession

Paying the Deficiency:

The difference between the amount outstanding on a contract and the amount obtained by the creditor upon resale of the vehicle is known as a “deficiency”. For example, let us suppose you owe $15,000 on a vehicle which gets repossessed. Your creditor resells it for $12,000. In this case the deficiency is $3,000 plus any applicable fees owing as per the contract. Such fees are those incurred due to the repossession and annulment of your lease or financing agreement. In many states, a creditor has the right to sue for a deficiency amount in order to properly collect the full amount outstanding, as long as it has followed the proper guidelines for repossession and resale. Similarly, a creditor is obligated to issue payment to you if there are surplus funds remaining after the resale is completed and the outstanding contractual obligation has been completed.

You may take legal action against a deficiency ruling if your creditor violated any of the rules surrounding the repossession. If the creditor committed actions such as failing to sell the vehicle in a commercially reasonable manner or delayed the launch of the lawsuit, you may have grounds to contest the deficiency ruling. Consult a lawyer for further information.

Electronic Disabling Devices

These are devices installed in vehicles under the rule of some creditors, which state that if payment installments are not made on time, the devices may be activated in order to prevent the vehicle from starting. The use of such devices is subject to the terms of your contract and the laws of the state. If you have questions about the use of these devices, contact the local consumer protection agency in your state or a lawyer.

Working with Your Creditor

It is easier to prevent vehicle repossession than to contest it after it has already occurred. If you anticipate having trouble making your payments, contact your creditor and make them aware of your situation. Creditors respond favorably to consumers that are proactive about their finances, and will work with you if they believe you will make the payments sooner or later.

You may be able to negotiate occasional changes in your payment plan or revise the payment structure altogether. Ensure that all changes to your contract are made in writing, in order to protect yourself from difficulties if they should arise in the future. In some cases, your creditor may refuse to make any changes to the contract – and may insist on repossession if you cannot make payments on time. Agreeing to a “voluntary” repossession may reduce the expenses incurred by the creditor in the process. However, you would still be responsible for the deficiency on your contract, and the creditor may still ascribe the details of this incident on your credit report.

If you are involved in bankruptcy, consult an attorney for information about your rights regarding vehicle ownership during the repossession process. For more information online consult the repo cars guide for more details.

Tags | annulment, applicable fees, car repossession, consumer protection agency, contractual obligation, creditor, creditors, Deficiency, installments, lawyer, local consumer protection agency, surplus funds, vehicle repossession