What Are My Viable Choices?
When faced with the prospect of defaulting on a car loan or lease agreement you may have a few alternatives to avoid doing a voluntary repossession.The most important thing to remember is upon performing a voluntary repossession there will most likely be a remaining balance due and owing to the lender or lessor. What does this mean? Simply, it give rights to the creditor to sue you to remedy the default. And I have seen creditors sue consumers for as little as $1,000. The creditor will most likely receive a judgement by the court (called a final money judgement) which will stay active for up to twenty years in most States.
This judgement can be renewed at expiration and the creditor will have the right to garnish funds in a bank account or levy an employment garnishment upon the debtor. This does not address a number of other issues; the judgement is a matter of public record, simply stated you will not have the ability to apply for conventional financing until which time the judgement is satisfied. And buying a new car the traditional way will most certainly be out of the question. If you sell a property the proceeds may be subject to the judgement, meaning you may have to take the proceeds to payoff the debtor. Then we have the issue of the judgement remaining on your credit report until which time it is satisfied. Not good, I recommend avoiding voluntary repossession at all cost!
Here Is An Alternative To Voluntary Repossession
If you qualify Car Lease Advisors will have a buyer take over your lease payments or loan payments. We can normally structure this in a short period of time, typically two weeks. To qualify your vehicle typically must be a late model car with somewhat reasonable monthly payments. If this is an option you wish to investigate I would recommend calling a Car Lease advisors consultant immediately at 888-608-5192. The Car Lease advisors program is free to the seller, as all fees are paid by the buyer.
Voluntary Car Repossession Process
When you finance or lease an automobile, your lender or lessor has rights that end once you have paid off your loan or lease obligation. These rights are established by the agreement you signed and the various laws of the State in which you reside. As an example, if you don’t make your payments on time, your lender may have the right to repossess, or take your car without going through a judicial procedure or giving you any advance warning. The lender may be able to sell your loan obligation to a third-party, called an assignee, who will have the same rights to as the original creditor.
Seizing the Vehicle
In many states, the lender can seize your car at the moment you default on the loan or lease. Your agreement will constitute what is a default, but failure to make a payment on time is a normally enough.
Once you are in default, most states permit the lender to repossess your car at will, without notice, and to come onto your property to do so. But when seizing the vehicle, your creditor may not commit a breach of the peace. In some states, that means utilizing physical force, threats of force, or removing your car from a closed and protected garage without your advance permission.
Selling the Vehicle
Once your vehicle has been repossessed, your creditor may decide to either keep it as compensation for your debt or resell it in a public or private sale. In some states, your creditor must let you know what will happen to the car. For example, if the car will be sold at public auction, state law may require that the creditor tell you the time and place of the sale so that you can attend and participate in the bidding. If the vehicle will be sold privately, you may have a right to know the date of the sale.
In any of these circumstances, you may be entitled to “redeem” — or buy back — the vehicle by paying the full amount you owe (usually, that includes your past due payments and the entire remaining debt), in addition to the expenses connected with the repossession, like storage, preparation for sale, and attorney fees. Or you could try to buy back the vehicle by bidding on it at the repossession sale.
Some states have consumer protection laws that allow you to “reinstate” your loan. This means you can reclaim your car by paying the amount you are behind on your loan, together with your creditor’s repossession expenses. Of course, if you reclaim your car, your future payments must be made on time, and you must meet the terms of your reinstated contract to avoid another repossession.
Any resale of a repossessed vehicle must be conducted in a “commercially reasonable manner.” Your creditor doesn’t have to get the highest possible price for the vehicle — or even a good price. But a resale price that is below fair market value may indicate that the sale was not commercially reasonable. “Commercially reasonable” may depend on the standard sales practices in your area. A creditor’s failure to resell your car in a commercially reasonable manner may give you a claim against that creditor for damages or a defense against a deficiency judgment.
Personal Property in the Vehicle
Regardless of the method used to dispose of a repossessed car, a lender may not keep or sell any personal property found inside the vehicle. In some cases, your lender must tell you what personal items were found in your vehicle and how you may retrieve them. Your lender also may be required to use reasonable care to prevent anyone from removing your property from the car. If your lender can’t account for personal items left in your vehicle, you may want to speak to an attorney about your right to compensation.
Paying the Deficiency
Any difference between what you owe on your agreement (plus certain expenses) and what your lender gets from selling the vehicle is called a “deficiency.” As an example, if you owe $18,000 on the car and your creditor sells it for $11500, the deficiency is $6,500 plus other fees you may owe under the agreement. The fees related to the vehicle repossession and early termination of your lease or early payoff of your financing. In most cases, your lender is allowed to sue you for a deficiency judgment to collect the remaining amount owed as long as they followed the proper procedures for repossession and sale of the auto.
You may have a legal defense against a deficiency judgment if, for example, your creditor breached the peace when seizing the vehicle, failed to sell the car in a commercially reasonable manner, or waited too long before suing you.
Electronic Starter Interrupt Relay Devices
Some lenders might not provide you with financing unless you agree to the installation of an start interrupt relay device which prevents your car from starting if you don’t make your monthly payments on time. Contingent on your contract with the lender and the laws of your state, using that sort of device may be considered the same as a repossession or a breach of the peace. How your state treats the use of these devices could affect your rights.
Talking with Your Lender or Lessor
Loan Modification For A Car? Maybe!
Car Lease advisors will talk on your behalf to your lender to prevent a vehicle repossession from happening. Many times we can work with the lenders if they believe we can get the payments back on track, even if slightly late. We may be able to negotiate a deferment in your payment or a present a new schedule of payments. If we can reach an understanding to change the original agreement, and prevent a car repossession, we can save the seller much heartache.
For additional information contact A Car Lease Advisor today
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