Voluntary car repossession refers to the act of voluntarily surrendering a car to the lender before it must be officially repossessed. This rather drastic measure may be appropriate in certain circumstances however all other avenues should be investigated first. A car may be subject to repossession when the borrower is unable to make one or more payments.
Usually the lender will call the individual who is behind on their payments and sometimes a grace period may be granted so the individual can catch up. However if the grace period ends and the individual is still in default on their loan the account may end up in the hands of a credit collection agency. Although a credit collection agency is not authorized to repossess a car without appropriate paperwork and notification by the lender they may at times intimate that this will be the consequences of nonpayment.
The borrower should have taken stock of their financial situation by this time and know if it might be possible to work out the amount owed by cutting back on expenses or taking a part time job. If it is possible to accomplish, paying off a debt can help with credit repair and damage control. When a debt collector calls or writes then repossession might be mentioned but the collection agency may not resort to that unless there is a court judgment initiated by the creditor and passed by a judge.
If a good look at the financial situation shows that it may not be possible to repay the loan than a person might consider all of their options including credit counseling, debt counseling, bankruptcy, or voluntary repossession. While most of these alternatives are not the most desirable they could be preferable to having a judgment and a involuntary repossession on their credit report.
If an option such as debt counseling seems the best course, then the debt counselor will normally notify the creditor and the creditor is then obliged to halt any legal proceedings and negotiate a repayment plan. However even with the best of counseling at their situations where a borrower simply is unable to repay a loan. In cases where an individual has become unemployed or their income has been dramatically reduced loan payments may not be possible and solutions such as voluntary car repossession might be the best choice.
If a car is surrendered voluntarily, the loan still may not be fully discharged. The car will then be sold at auction or privately and any difference between the sale price and the amount still owed will be the responsibility of the borrower to repay. Before choosing any course of action, it may be wise to seek financial or legal advice from a qualified professional.
Usually the lender will call the individual who is behind on their payments and sometimes a grace period may be granted so the individual can catch up. However if the grace period ends and the individual is still in default on their loan the account may end up in the hands of a credit collection agency. Although a credit collection agency is not authorized to repossess a car without appropriate paperwork and notification by the lender they may at times intimate that this will be the consequences of nonpayment.
The borrower should have taken stock of their financial situation by this time and know if it might be possible to work out the amount owed by cutting back on expenses or taking a part time job. If it is possible to accomplish, paying off a debt can help with credit repair and damage control. When a debt collector calls or writes then repossession might be mentioned but the collection agency may not resort to that unless there is a court judgment initiated by the creditor and passed by a judge.
If a good look at the financial situation shows that it may not be possible to repay the loan than a person might consider all of their options including credit counseling, debt counseling, bankruptcy, or voluntary repossession. While most of these alternatives are not the most desirable they could be preferable to having a judgment and a involuntary repossession on their credit report.
If an option such as debt counseling seems the best course, then the debt counselor will normally notify the creditor and the creditor is then obliged to halt any legal proceedings and negotiate a repayment plan. However even with the best of counseling at their situations where a borrower simply is unable to repay a loan. In cases where an individual has become unemployed or their income has been dramatically reduced loan payments may not be possible and solutions such as voluntary car repossession might be the best choice.
If a car is surrendered voluntarily, the loan still may not be fully discharged. The car will then be sold at auction or privately and any difference between the sale price and the amount still owed will be the responsibility of the borrower to repay. Before choosing any course of action, it may be wise to seek financial or legal advice from a qualified professional.
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When you have reached the end of the straw, you may want to look into voluntary car repossession. Car repossession is not fun - but sometimes, voluntarily is better. Do you know why?
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