How to Have a Car Repossessed Voluntarily
If you ever find yourself in a financial bind and can no longer manage your monthly car payment, you can have your car voluntarily repossessed. A voluntary repossession is a result of a person's own free choice. He willingly returns the car to the lender.
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Things You'll Need
- Contact information for your lender or creditor
- Certified Credit Counselor
Instructions
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Weigh your options. First, take a look at your financial situation and determine whether this is the best option for you. If your car is voluntarily repossessed, this information will be reported to the credit bureaus and your credit score will drop.
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Speak with a Certified Credit Counselor, which you can find at the CCCS website (see Resources below). A Credit Counselor can help you sort through your options, advise you on debt management and try to arrange a repayment plan that is suitable for both you and the creditors.
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Contact your financial lender or creditor. Let them know about your current situation. Explain to your lender the circumstances and tell them that you can no longer afford the payments. Give your lender permission to pick up the car or take it to the dealership yourself.
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Make a decision about your financial obligation. If the lender sells the vehicle at an auction, you are still responsible for the remaining balance of what you owe them (deficiency balance). If by chance, the car sells for more than what you owe the lender, then the lender is required to pay the excess money to you.
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Establish a payment schedule with your lender. If you do not make a payment, the lender might take you to court, sue you or garnish your wages. You can possibly avoid collection, attorney and court fees if you go ahead and set up a payment schedule with them.
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Tips & Warnings
If you ever fall behind on your car payments, immediately call your lender to discuss your situation. Quite often, lenders will try to work with you and give you some options to best suit your situation. Your lender might be able to re-finance your car for you, lower your payments or grant you an extension. Try to avoid having a car repossessed, even voluntarily.
A repossession can lower your credit score and remain on your record for up to 7 years. It does not matter whether the car was repossessed voluntarily or involuntarily--it will still appear on your credit report. A low credit score can make it very difficult for you to obtain credit or purchase another vehicle.
