Repossession

[SirMKnight]

I am contemplating doing a voluntary repossession. When I took out my car loan it was just before the downturn in the housing market which affected us painters. Since then I have tried to keep things going by means of my own operation but that did not hold up and I have been struggling to fulfill the auto responsibilities as well as my other bills but there does not seem to be enough to right now.

I asked about a hardship modification to see if I could get the payments adjusted to more bearable levels but the Rep I spoke with only offered one month payment reprieve if I pay up the late payment and the interest for this month. 

I am most interested in honoring my responsibilities but one month reprieve will not allow me properly reorganizing myself.

I am thinking of doing a voluntary repossession so that I can finally be able to address my other responsibilities and try pulling myself out of this financial hole.

I also realize that my thinking maybe neglecting some valuable details and so I am asking for some imput on the consequence of such an action and whether it actual relieves me of the debt to the lien company.

[llecs]

I'm sorry you are in that situation.

If you return the vehicle and do a voluntary reposession, you are responsible for the difference after they sell it or auction it. That difference will be recorded as a charge-off and you'd have to pay that ASAP. IMO, don't do it. Have you tried selling the car? You'd get a better price and save some money at least. How about a refi?

If I was in that situation (and I did have a repo once), looking back, I would do anything and everything to fix my budget. I'd take a look at my expenses and make dramatic cuts where necessary. Write out every expense. Cut back on eating out, entertainment, movies, travel, gifting, hobbies, cable, TV, or anything else that drains your income. I'd also make temporary cuts on investing or other savings just to have the extra cash. Look at last years taxes. If you received a refund, then you need to reduce your taxes on the W4. If earning a W-2 wage now, change your withholding taxes to $0 temporarily (you won't have to worry about it until April 2010 as 2008 is almost over). Change your car insurance to the minimum needed. Cancel your home phone if you can operate on a cell or vice-versa.

For income, increase it. Look at other lines of work. Start a second job, if working 8+ hours now. Start your own business. Sell stuff around your house. Make E-bay your friend. If planning to get rid of the car, then maybe you had a second car laying around. Sell that to help cover the payments. Cash in any savings or investments (watch out for taxes though) to cover the car, temporarily. If in the painting biz, sell any stock, equipment, or supplies to cover the negative cash flow. Make any and all changes to cover that payment until you get back on your feet or you have a chance to sell it.

[SirMKnight]

llecs

I have thought about that pitfall - with today's market being what it is.

I have been watching the prices for the same years vehicle on eBay and other places and the

going prices are not that encouraging for trying to sell.

Based on what you have brought to my attention, they are going to be using that price to

determine what its valued as opposed to what I currently owe. Which means that method would

not really solve my problem at all.

Hmmmm 

[Anonymous]

If it goes repo, the bank will not care what the car's value is.  they will auction it iff for well below it's resale value and then sue you for the difference between that and what is owed. 

the best bet is obviously to sell the vehicle and find a way to cover the difference between payoff and what you can sell it for, but of course if you had that much cash hanging around you wouldn't be so concerned.

Good luck as it is a tough position, just understand that it will take a good 4-5 years of positive credit history to really dig out from under the repo stigma. 

[SirMKnight]

Thank you both for the feedbacks.I have decided after reviewing both your feedbacks that it is my best interest to fight as hard as possible to survive this crazy period. There are too many dangers in voluntarily putting my neck on the block. Even though they were not willing to do a modification of the loan they were "kind" enough to give me until 26th to pay the past due amount so I am going to be positive that somehow despite the difficulties I will have to endureI can get something together and continue to keep this vehicle since its part of my

plans to rebuild my credit.

[Anonymous]

Im new here to the board, However my question is (and all input is appreciated) I have a charge off on my report and the balance it shows appears to be the balance for the loan itself, rather than the deficiency balance. I was contacted recently by an agency claiming to now have the account although I have recieved nothing from them in writing either before or after this initial contact. My question is twofold firstly why does the amount appear as the balance on the loan? and secondly why have I not recieved anything in writing if this is a valid amount to attempt to collect? I truly question the validity of this attempt to collect this debt

[SirMKnight]

I am unsure about what you mean by having a charge off - I am presuming that there was some negotiation between you and the loan company and they relinquished some of the debt leaving you with a certain amount that you need to pay. Would that be correct?
I would immediately contact the original loan company about the discrepancy since their reporting needs to be updated or corrected before you do any negotiations with the collections agency. I Never agree to anything with a collections company if I question its accuracy.

[Anonymous]

Thankyou my friend for responding ,the account originally appeared as follows Charged off as bad debt
Profit and loss write-off. This was a voluntary repossession on a lease agreement I returned the car to the bank in 2003 after 38 months. I never negotiated anything with the loan company.An amount owed appeared on my credit report although the amount appears to be the balance of the loan as I mentioned. Thanks for anwser to this question which is to contact the original creditor.

I was then contacted by another agency about a month ago

I believe the reason they have not sent anything in writing is because they are aware of this; although when I was contacted they did ask me had'nt I recieved a letter from them about the debt. I have never recieved any letters from them and as I mentioned they have failed to send me anything in writing regarding this debt. I  believe as you have forewarned me that they would like for me to negotiate with them for the amount originally shown on my report before sending me anything in writing. I'm sure the amount is for the balance of the loan rather than the deficiency balance. I dont believe they can validate this amount legally because it does not show the correct amount owed otherwise would;nt they have sent me something in writing within 5 days after contacting me? as required    
  

[Anonymous]

knight -

what do you believe the negative equity is?  Have you listed it on Yahoo Auto, Craigslist, etc.  There are a lot of free places to list....and you should keep the for sale sign up just in case you get "the right buyer" at some point.  Just a little time to list and keep listed, and you can't be any for the worse.  Keep a for sale sign with message phone number in the window too....its amazing that sometimes you drive by the right buyer.

If you can get a buyer close enough to pay off, maybe you can convert the difference to some type of personal loan....better to make small payments on a small difference than struggle with the larger ones.

What is your credit currently looking like, what derogs?  What is your FICO scores?

Message Edited by txjohn on 04-18-2009 07:33 AM