If your car has been repossessed, what should you do? How does one recover from it? Here are five steps to bounce back from a car repossession:
1. Find out why your car has been repoed.
The most obvious reason for car repossession is missed payments. However, some reasons aren’t as obvious such as failure to get insurance as stipulated in the loan contract. Some states are particular about that which is the reason for some repossessions.
If you haven’t missed any payments and your car has been repoed, call your lender and find out exactly why it happened. Do not jump to conclusions. Hear out what they have to say so you know how to proceed.
If you’re in a position where your strapped for cash or are going through some life-changing events, such as a medical condition or unemployment, call your lender and talk to them. In most cases, lenders are willing to work with you by making special payment arrangements.
2. See if you can get your car back.
More often than not, repoed cars can be recovered if you can come up with the money to pay the loan and repossession charges in full. You cannot, however, buy your car back at an auction.
Talk to your lender and see if it’s possible to work out a new payment plan. However, before you take this step, generally, repoed cars are a result of the owner’s financial hardships. Take an honest look at your situation and judge if retrieving the car is worth it or not.
Even if you can recover the vehicle but you’re unable to sustain it, you might end up in a worse financial situation. It is best to seek counsel from a repossession attorney. They can shed some light on your situation and help resolve your issue.
3. Keep yourself protected by knowing all your rights.
As you talk to a repo attorney, ask them about your rights as well. For instance, if your car is up for repossession and it’s locked up in your garage, the repo men cannot break down your door just to acquire your vehicle.
It is also important to note that only your car can be taken from you. Your other personal possessions should be given back to you.
These are just some of your rights. If you feel that in the course of the repossession some of your rights have been violated, feel free to get in touch with a consumer lawyer.
4. If the car was sold at an auction, ask if you still owe your lender money.
Usually, repoed cars are sold at auctions. Once sold, depending on the amount the car sold for, you will be charged with a deficiency balance.
For example, the bank lent you $10,000 to buy a car. After a few months or years, you were able to pay off 30% which means you still owe them $7,000. If the repossessed car is sold at an auction for $6,000, you still owe the bank $1,000. That’s the deficiency balance that you should still pay, including repo charges.
Just because your car was already sold at an auction, do not make the mistake of assuming that you no longer have any financial obligation. Check with the lender if you still owe them money or not. Hopefully, they sold your car for more than the remaining balance. If not, you need to make payment arrangements immediately so you don’t get in deeper trouble.
5. Repair and rebuild your credit.
When a repossession takes place, it stays on your credit report for up to seven years, according to Experian. It might take some time for you to fix and rebuild your credit but do it anyway. Be proactive and make sure you pay all your bills on time and not miss any deadlines.
As you do this, it will offset your negative history and you’ll end up with a higher credit score than before. Just be faithful and diligent in paying off your debts. You’ll be in a better position once you’re done.
A car repossession is never an easy thing to deal with but knowing how to go about it will lessen your stress level and anxiety.
