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Charge off vs Repossession

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Established Contributor

Charge off vs Repossession

I had a car loan and they repossessed the car. I still have a balance with them but my question is should it be reporting as a charge off or repossession? They auctioned the car off and its currently up for sale. Right now on all my reports it says charge off and on Equifax it says worst delinquency is repossession but all of them are reporting as charge off so I am really confused on this.






Starting Score: 494 503 521
Current Score: 503 507 507 2/19
Goal Score: 680


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Message 1 of 9
8 REPLIES 8
Community Leader
Super Contributor

Re: Charge off vs Repossession

Repossession just shows something was taken back. Not paying the balance owed makes it a charge off.







Message 2 of 9
Established Contributor

Re: Charge off vs Repossession

I haven’t had a chance to because they just sold it and sent me information on what I owe. This just happen last week.






Starting Score: 494 503 521
Current Score: 503 507 507 2/19
Goal Score: 680


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Message 3 of 9
Community Leader
Super Contributor

Re: Charge off vs Repossession

They charged off the account when they decided to repo the car. Personally, I don't think auto lenders should be allowed to do that until after the sale and a final bill is sent to someone. Charging off an account is for tax purposes and they're going to get some of that money back making the charge off total different in the end.







Message 4 of 9
Moderator

Re: Charge off vs Repossession

For fico score purposes charge off and repo are the same

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Message 5 of 9
Established Contributor

Re: Charge off vs Repossession

Does it usually go to zero or does it stay with a balance?






Starting Score: 494 503 521
Current Score: 503 507 507 2/19
Goal Score: 680


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Message 6 of 9
Community Leader
Super Contributor

Re: Charge off vs Repossession

It stays with a balance. It will usually go to 0 when a collection agency picks it up. It'll then pop up as a new account for more than the original balance due to fees and interest.







Message 7 of 9
Legendary Contributor

Re: Charge off vs Repossession

It could be either or both.

Repossession is the taking back of the property that was used to secure the loan.

They can then report that fact to the CRA as the current status (field code 17A), or the past monthly status under the payment history profile (field code 18). 

The credit reporting manual provides for reporting of either field code as a repo (code 96 if a balance is due) or "unpaid balance reported as a loss (charge-off)"  (code 97).

Whether they have actually taken the accounting measure of moving the unpaid debt from an accounts receivable column of their accounting ledger is an internal decision made by them.

 

Until they have assessed the amount of the potential or actual loss, they can report simply as a repo, as that has already occured,  but thereafter, then can optionally choose to report any portion that is determined to represent a loss as a charge to profit and loss.

 

If the remaining debt obligation results in a net loss to the creditor, which is normally the case of depreciating vehicles, then the creditor suffers a loss and can take a charge to profit and loss.

 

Whether a reporting is considered to be the "worst delinquency" is not a credit reporting issue, it is a statement made by the vendor of your credit report.  It is not disputable as inaccurate reporting.

You simply had a debt that resulted in both a repossession of the property and a net loss to the creditor.

Message 8 of 9
Established Contributor

Re: Charge off vs Repossession

Thank you both just wanted to make sure. I don’t plan on disputing anything at all I just want to pay everything and make sure it updates accurately. I’m not looking for any big purchases like a car until 2024-25 anyways. So I can wait until everything falls off.





Starting Score: 494 503 521
Current Score: 503 507 507 2/19
Goal Score: 680


Take the myFICO Fitness Challenge




Message 9 of 9
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