Previous Total Loss - New Loan Needed

[notanxious]

I was subject to an auto theft back in 2008 and insurance paid 10k of auto loan, leaving me with a 6k balance and no car. I have since not paid this amount, have since financed a car through dealer financing with Americredit (GM Financial), 6 months on time payments. I am attempting to finance another vehicle now and selling the current one, on the first attempt through a local credit union then tell me that the balance on the auto loan is 17k and looks to be a reposession (they pulled experian)..? Should not be a reposession, what is the correct state of this to be reported? I pulled all three reports and see the following... I also contacted the creditor who confirmed that the balance is 6k and was charged off on 3/2014, the last payment I made on this account was August of 2008

Comments: Equifax  TransUnion  Experian  Equifax CHARGED OFF ACCOUNT TransUnion Profit and loss writeoff

Bureau    Code    DateOpen    HighLimit    MonthlyPayment    AccountBalance      LastReported    AccountStatus    AmountPast Due

Equifax          I       06/2006       $6,211          $411                        $0                                02/2014              Paid                       $0  

Experian       I       06/2006        $23,208                                          - -                               02/2014              Paid                        -  

TransUnion I       06/2006         $23,209       $411                        $0                               08/2009              Paid                        $0

I was denied the auto loan due to this account, any suggestions for private auto loans would be great

My Scores Equifax 639, Transunion 651, Experian 644

[StartingOver10]

When you have an accident the insurance company pays the value of the car which in no way has any relationship to the amount of the loan balance.

So any amount that is not paid by the insurance company is still owed by the borrower. In your case there was a deficiency of $6k.

Some people have gap and gap would cover the difference. Others have to pay the $6k out of pocket.

Because your wreck was the result of a theft, I would think that other insurance provisions kick in - but I have no idea of what you had for coverage. I don't know what would be the remedy for a deficiency balance in the case of a theft. Maybe another poster has experience with that here. I do know the deficiency doesn't just dissappear.

If the borrower doesn't pay the deficiency, then the loan is in default. It doesn't matter that the collateral doesn't exist anymore. The funds are still due so the creditor will follow the default provisions in the loan agreement you signed. If you continue to default, then the lender can follow repossession procedures in order to obtain a default judgment against you.

The fact that the vehicle is destroyed has no impact on the default procedures other than there is a lump sum partial payment made to the lender for the value of the vehicle at the time of the wreck.

To see if you have an actual judgment against you, check your public records in the county where you are located. Not all judgments show up on credit reports. If you have a judgement you want to take care of it (satisfy) and record the satisfaction. You can usually negotiate the judgment. Once you have done that, then the next time you go for an auto loan you can show that it was paid. FYI:  Judgments accrue statutory interest daily. They last anywhere from 10 years to 20 years and can be renewed in most districts. Check your state's statutes for specific info on judgments in your area.

[notanxious]

Is it possible to have the account removed from the credit report since the amount reported is incorrect? There is no judgement, or collections, all that shows is the initial balance as charged off. I could make the deficiency payment but do not want to take a hit to my credit report by bringing the account current.

[pizzadude]

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@notanxious wrote:

Is it possible to have the account removed from the credit report since the amount reported is incorrect? There is no judgement, or collections, all that shows is the initial balance as charged off. I could make the deficiency payment but do not want to take a hit to my credit report by bringing the account current.

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You might want to consider negotiating a PFD, whereby the account is deleted from your reports in exchange for payment.

[notanxious]

Just put a PFD letter in the mail. I read somewhere else that the original creditor is less likely to accept a PFD.

[Remember0]

With a 640+ FICO, I'd try to just find a lender that doesn't care rather than pay that $7k deficiency. I don't know if it'll work for sure, but maybe try DCU? They might risk it depending on how much car you want, your income, and the exact FICO they pull from EQ (they won't touch below 620 generally).

But with that kind of FICO, there will definitely be a lender out there willing to lend.

For future reference for other posters: If the statue of limitations has not run out on that debt, I disagree with the above posts. Do NOT send a PFD. Last thing you want to do is wake a sleeping bear and get sued for a judgment or something! Leave it alone if the statue is not over in your state!

[StartingOver10]

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@Remember0 wrote:

With a 640+ FICO, I'd try to just find a lender that doesn't care rather than pay that $7k deficiency. I don't know if it'll work for sure, but maybe try DCU? They might risk it depending on how much car you want, your income, and the exact FICO they pull from EQ (they won't touch below 620 generally).

But with that kind of FICO, there will definitely be a lender out there willing to lend.

For future reference for other posters: If the statue of limitations has not run out on that debt, I disagree with the above posts. Do NOT send a PFD. Last thing you want to do is wake a sleeping bear and get sued for a judgment or something! Leave it alone if the statue is not over in your state!

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Yes, ^^^ this is true. It depends upon exactly where the debt is at the time you discover the debt.  I was working from a theory of a judgment. A judgment has to be taken care of and many people have judgements that they either forgot about or never knew about them. You can easily check your own public records so you know.

However, if it isn't a judgment, then that is a different thing altogether. If it isn't past the SOL, then don't wake the "sleeping bear". ....

[coterotie]

Agree with all the above, but one other point which at this time is moot...

How hard did you negotiate with the insurance company?  In the case of a theft, since the car is gone how did they assess condition etc.  This is a case where paying a small fee to an attorney may have resulted in very little or no deficiency or you could have negotiated a payoff for a smaller amount with no dings to your credit.

[pizzadude]

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@Remember0 wrote:

With a 640+ FICO, I'd try to just find a lender that doesn't care rather than pay that $7k deficiency. I don't know if it'll work for sure, but maybe try DCU? They might risk it depending on how much car you want, your income, and the exact FICO they pull from EQ (they won't touch below 620 generally).

But with that kind of FICO, there will definitely be a lender out there willing to lend.

For future reference for other posters: If the statue of limitations has not run out on that debt, I disagree with the above posts. Do NOT send a PFD. Last thing you want to do is wake a sleeping bear and get sued for a judgment or something! Leave it alone if the statue is not over in your state!

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I agree that in general the ONLY time you should touch old, dormant debt like this is if you have funds available to PIF.    OP stated that funds were available, so it makes sense in this case.

[notanxious]

Thanks for the suggestions, I have already sent the PFD letter, but will also be applying to DCU.

https://www.dcu.org/loans/auto-choices.html