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How to Recover from a Repossession of your Car in 5 Steps
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How to Recover From the Repossession of a Car in just 5 steps
Find out the reason your car was taken over, then see if you can return it -- and know your rights.
By Claire Tsosie Assigning Editor | Credit cards, business software Payments Claire Tsosie is an assigning editor for NerdWallet. Her specialties include analysis and planning. She has written articles on a variety of subjects, including software for business, Medicare and home improvement. Prior to that, she worked as a credit cards writer at NerdWallet for more than five years. Her work was highlighted by Forbes, USA Today and The Associated Press. She's given talks on both CardCon (2017, 2018) as well as FinCon (2019).
as well as Lauren Schwahn Lead Writer | Personal finances and the debt Lauren Schwahn is a writer at NerdWallet who writes about budgeting, debt and money-saving strategies. She is a contributor to the "Millennial Money" column of The Associated Press. She has been featured by USA Today, MarketWatch and more. Lauren has a bachelor's degree in the field of history at her home at the University of California, Santa Cruz. She is based within San Francisco.
Updated Nov 28, 2022
The content was edited by Sheri Gordon, Assistant Assigning Editor Credit scoring, making more money and conserving it, paying off the debt Sheri Gordon serves as the assistant editor assigned on the Core Personal Finance team at NerdWallet and has been editing financial content for more than 20 years. Prior to joining NerdWallet, Sheri was on the metro and business copy desks of the Los Angeles Times, where she worked on stories that earned an award in the year 1998 for the Pulitzer Prize for breaking news. Sheri edited magazines on arts, culture food, education, and activism. She has published books about water policy, healthy living and architecture. Sheri graduated with an undergraduate degree in Arts in history at the University of California, Los Angeles.
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If your vehicle is repossession It's possible that you don't know why it happened -- or what you'll need to do to arrive at work the following day. However, you can get back on track by taking action to take the care of your transportation requirements and also to safeguard your credit from damage.
There are 5 steps that you could take to recover from a repossession:
1. Ask why your car was repossessed
If you've , you may know exactly why your vehicle was taken. In other instances, the reason isn't so obvious. In certain states, failing to obtain insurance as part of a loan or lease contract can count as a default, and your car can be repoised due to it. Contact your lender before making any rash decisions so you can clarify the situation.
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2. Find out if it is possible to return your car that was repossessed
A lot of times the bank or repossession firm will allow you to take your car back as long as you repay the loan in complete, as well as all repossession expenses prior to the time it is auctioned off. It is possible to return the loan and come up with an alternative payment plan as well. The repossession may not be removed from in these situations, but the new payment will typically be recorded if you sign arrangements in agreement with the lender (but not if you buy the car back from auction).
Before getting your car back Think about these questions:
If you took your car back, would be able to pay for the cost of insurance, maintenance, and fuel?
Not making the necessary repairs or getting into an accident without insurance could result in a worse financial situation. Without gas, you still wouldn't be able to travel from point A to point B. If you're unable to afford these costs, reselling your vehicle might not be your most cost-effective alternative.
Do you have access affordable public transportation or an autopool?
Getting to work by bus or another means could be a better choice rather than re-establishing your loan or paying the amount and fees for repossession in full.
Do you intend to file for bankruptcy?
If you're extremely behind in your expenses and have no way of making things better, you may already be contemplating . File before the repo agency decides to sell your vehicle and there's a high possibility that you'll be able to keep your car and work out the best way to pay off your debts. Talk to your about whether this is possible in light of the kind that you're filing.
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3. Know your rights
Even if your car is taken away still have protections
The lender or repo company can take possession of the vehicle, but not the items inside
If you have left your laptop in your car, for instance you are liable to the lender can't keep or sell it. In some states in some states, the repo or bank agency could be required to give you the list of things in the car , and inform you how you can retrieve them. If that's not the case then you might need to ask. This generally doesn't pertain to any accessories you have in your car, such as new wheels or an upgraded audio system.
Your property shouldn't be damaged by the process
If your vehicle is stored in your garage for instance, a repo agent can't break down your garage door to retrieve your car. If you feel that your rights have been infringed, you should contact an attorney for consumers.
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4. If the car is sold Ask if you owe money
If a repo agency takes possession of your vehicle and sells it at auction it could be that you're not owed any money to it. However, that's not always the situation.
Say a bank gave you a $10,000 car loan and you still owed $9,000 on it when you failed to pay. If the car you repossessed sold at auction for $7,000 and you owe the remaining $2,000 for the vehicle, plus repossession fees In some instances. This is called a deficiency balance.
Deficiency balances are common particularly when the auto loan was for a new car. There are times when you lose 10% of a brand new car's value just by driving it off the lot. But the lender or repossession company has the obligation to conduct the sale in the "commercially reasonable way." When the repoed vehicle is offered at a cost that is lower than the actual market value of the car, you might be able to dispute the high deficiency balance in the courts.
If you don't pay attention to the deficit balance, the account may be . The lender can also sue you for this balance typically, if the debt is within the .
The accounts in collections are kept are valid for seven years. when you've got the cash, it's usually a good idea to settle the balance to minimize the impact on your credit.
Readers may also have questions.
What happens if you make a repossession on your own?
If you notify your lender that you are unable to pay your loan and plan to return the vehicle. The lender will then resell the car, and you'll get a receipt with the sale's details. As with repossessions involuntary the buyer must pay the difference between the price that the vehicle sold for and what you owed for the loan. That's called the deficiency balance.
How long does a voluntary repossession stay in your credit file?
Voluntary repossession, which is a form of loan default, will stay on your credit report for a period of time . This type of negative mark can affect your credit scoreparticularly your auto-specific credit scores, which determine the interest rate you pay for your next vehicle loan.
What happens when you get your vehicle seized?
If your car is seized, it could be auctioned off at auction. If the car is sold for less than you owe, you may be sued for the difference, known as a deficiency as well as any fees that may be applicable.
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5. Do your best to improve your credit
A for up to seven years, meaning a significant aspect of getting your credit back afterward is just waiting. However, you can take a proactive approach by paying your bills on time and trying to pay off any other debt. This way, by the time your negative history comes off the record your credit score will be higher than it was previously and you'll be in better position.
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Find out how your credit is scored
See your free score and the factors that influence it, plus insights into ways to keep building.
Authors' Bios Claire Tsosie is an assignment editor for NerdWallet. The work she has done for NerdWallet was featured in Forbes, USA Today and The Associated Press.
Lauren Schwahn covers consumer credit and debt for NerdWallet. Her work has been covered by USA Today and The Associated Press.
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