Schedule A Consultation
(662) 678-8009

Will A Voluntary Repossession Affect Your Credit Rating?

voluntary repossession in mississippi
Posted on: January 31st, 2019 by: Amanda Daniels  Topic: Bankruptcy

When you fall behind on your car payments, your car could be repossessed. It is a growing problem in the United States and many are forced into bankruptcy.

In fact, according to Heather Long, an Economy writer for CNNMore than 107 million Americans have at least one active car loan right now. About 6 million Americans with an active loan are 90 days or more behind on their car payments. That puts them in danger of a possible repossession.

Car repossession, whether involuntary or voluntary, results in a lower credit score. That said, voluntary repossessions have some advantages because you have some control over the situation. The key to voluntary repossession is to act before you have missed any payments. If you are experiencing financial difficulty, or anticipate you may be unable to make upcoming payments, you can minimize the consequences by calling Amanda Daniels, a Mississippi bankruptcy lawyer, at (662) 678-8009.

What Should I Do If I Can’t Make My Car Payments?

Once you have missed car payments, things get worse quickly. Your creditor has the legal right to repossess your car. Involuntary repossessions are inconvenient and can be humiliating as well. You can avoid this by doing one the following before you miss a car payment:

1. File for Bankruptcy

If you successfully file for bankruptcy, an automatic stay will be enacted while your bankruptcy case is in process. This prevents creditors from repossessing your belongings unless authorized by the court. Some creditors are unwilling to spend the time and money on a petition asking the court to overturn the stay, which will give you some time to step back and consider your options. Read more about the value of filing for bankruptcy.

2. Negotiate with your creditors

When your financial difficulties are less serious, there may be better options than filing for bankruptcy. In cases where you just need a few months to get back on your feet financially, you can reach out to creditors and explain your situation. Creditors will sometimes be willing to allow you to make a late payment or restructure your payment plan. The key to this option is that you are approaching your creditors before you have missed any payments.

3. Offer voluntary repossession to your creditors

If your creditors aren’t willing to let you make a late payment or re-negotiate the terms of your loan, you can offer to voluntarily repossess your car. Offering this is a bargaining chip of sorts; it may convince the creditor to reduce your debt or settle. Because you are offering them a chance to avoid the hassle and expense of paying a collection agency and the costs of an involuntary repossession, they may decide to work with you to find a solution.

In the future, your credit report will reflect the repossession (both involuntary or voluntary), as well as any late payments. Unfortunately, this hurts your credit score and makes it harder for you to get approved for future loans.

If your car does get repossessed, the creditor will sell the car and apply the proceeds of the sale towards your unpaid loan balance. Any difference between the unpaid loan and sale proceeds is called a deficiency balance, and you will be responsible for paying it. If you aren’t able to make payments for the deficiency balance, your credit score will be damaged when the deficiency balance is turned over to a debt collection agency.

A Mississippi Bankruptcy Attorney Can Help!

Consulting with an experienced bankruptcy attorney in these situations will help you decide which of the above options is best for your financial situation. In addition, a bankruptcy expert can represent you and negotiate with your creditors, which can help you avoid repossessions and bankruptcy.

Don’t wait until you have missed a payment to act. Call the Law Office of Amanda Todd Daniels today at (662) 678-8009 to schedule your consultation and take control of your financial situation.

Tupelo Attorney

  (662) 678-8009

Amanda Todd Daniels is a general practice attorney providing legal services for residents of Mississippi, including Tupelo, Booneville, Corinth, New Albany, Pontotoc, Oxford, Amory, Aberdeen, Fulton, and Ripley MS.

"I recommend Mrs. Daniels to anyone needing legal assistance. She was fast and efficient when dealing with my case. Mrs. Donna gets 10 stars. Never did I feel uncomfortable when asking any of my many questions. Thanks so much for all of your assistance." ~ Hillary B.

Read more reviews