When someone has a vehicle that they no longer can afford, they often mistakenly think that turning in the vehicle– called a voluntary repossession— will be viewed more favorably by the lender and will prevent any further collection action.
Unfortunately, lenders treat a voluntary repossession the same way they would treat a regular repossession where they have to come and tow the vehicle.
Two Types of Repossession
Either type of repossession will result in the vehicle being sold, almost always for less than what is owed on the loan as the vehicle will be sold at auction. You will be responsible for repaying the balance still owed on the loan, even if you allowed the vehicle to be voluntarily repossessed. Oftentimes, the balance left on the loan is sizable.
The Impact on Your Finances
The lender will take collection actions against you to get the balance of the loan paid off. The lender may call you, send you letters, or even sue you. Depending on your circumstances, if the lender wins the lawsuit, they may be able to freeze your bank account, sell your belongings, or lien your home.
Just because you cooperate with a lender and allow a voluntary repossession, there are still serious consequences to that decision. Fortunately, the balance left on the loan can be eliminated or restructured in bankruptcy.
If you’ve had vehicles repossessed, voluntarily or otherwise, and still owe the lender, give Steidl & Steinberg a call. For over 30 years, we have been helping people solve their debt problems, including those stemming from repossession.