Voluntary Repossession Is Still A Repossession

14 Feb Voluntary Repossession Is Still A Repossession

A repossession of any type is still a repossession, even if you turn in your car voluntarily. People sometimes believe, perhaps at the encouragement of the auto lender, that if they turn in their cars that things will be better for them.

Be clear: whether a car is repossessed in the middle of the night or dropped off at the dealer, both are repossessions that can lead to a deficiency balance and will be reported on the borrower’s credit report as a repossession.

To prevent the negative mark that a repossession makes on a credit report, the loan must be paid in full. The options are to continue payments, or sell the car – although the seller will have to pay the difference to get the lender to release the title if the price is less than the payoff.

People need to beware of scams where people agree to take over the monthly payments, then disappear with the car. People who take over other people’s car loans are usually bad credit risks and unable to get a loan in their own name. Many fail to make payments on time, which lead to late payments on the borrower’s credit report and may still result in a repossession.

Even trusted family members who promise to make payments often fail to do so. Their hearts may be in the right place, but if they don’t have the financial ability to pay or if they are less than responsible financially, that person will cause late payments or even a repossession to be placed upon the borrower’s credit. The original borrower probably won’t even know about it until it is too late.

Another option to consider if you are having problems making car payments is to meet with an experienced bankruptcy attorney. Chapter 13 bankruptcy may be able to restructure car payments to allow payments to be made, and/or may help lower or get rid of other bills that may have kept a budget from balancing. Chapter 7 may also help rid people of credit cards, loans or medical bills and make it easier to pay the car payments.


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Concentrating in Consumer Bankruptcy Law since 1988; Wake Forest Law School JD 1987 Law Office of Susanne M. Robicsek since 1993, Law Clerk to Judge Rufus Reynolds, US Bankruptcy Judge for Middle District of NC; Burns Price & Arneke, PA, David Badger and Associates, PA.

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