Voluntary Car Repossession In Simple To Understand Terms
Voluntary car repossession means that the car has been surrendered voluntarily when loan payments are in default
. This is an extreme measure however in some circumstances it can be appropriate. A person who falls behind on their loan payments may start receiving letters and phone calls from the lender within 1 to 2 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.
Before the debt situation becomes problematic a person should take stock of their financial situation and see if there is any possible means to repay the loan. Bringing along current can help mitigate the damage that defaulting on payments has done a credit rating. At times it may be necessary to sacrifice some luxuries in order to do this and in other situations it is not possible.
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.
A car that is repossessed voluntarily will normally be sold by the financial institution in an attempt to recover their investment. In many cases a vehicle would be sold at a price well under its real value. Any difference between the sales price and the loan amount must be repaid by the borrower.