Saturday, November 9, 2013
In a world of low pay, Voluntaty Repossession
"Voluntary repossession" is a term used to describe a situation in which a consumer voluntarily surrenders the property securing a loan, such as an automobile, to the lender that financed the purchase. Voluntary repossessions generally occur when a consumer has fallen behind on his or her loan payments, and decides to surrender the property rather than forcing the creditor to proceed with repossession. Voluntary repossessions occur most frequently with vehicles, but can occur with any type of secured loan, such as the purchase of work equipment, jewelry, etc.
Now, onto to your questions about voluntary repossession. To voluntarily surrender your automobile or other property to the lender that financed its purchase, you would first need to contact the creditor to explain the fact that you can no longer afford your monthly payments, and that you wish to surrender the property. At that point, the lender will likely provide you with a location at which you can safely turn over the property, and tell you any details you need to know about its procedures for processing voluntary repossessions.
Do not be surprised if your creditor is resistant to your request to voluntarily surrender your vehicle; the lender will likely try to work with you to figure out a way for you to keep the loan current and retain the property. These efforts may actually help you in figuring out a way to maintain the loan. However, if you are sure that you cannot afford the loan payments, voluntarily surrendering your vehicle can be a reasonable choice.
How does a voluntary repossession compare to a standard repossession?
In regard to your credit, both a voluntary repossession and a standard repossession have the same effect on your credit rating. They will both appear as repossessions, and will both result in a significant negative mark on your credit history. Under the FCRA, a repossession will appear on a credit report for 7 years from the date of first delinquency. You will likely see your credit score drop substantially, as having a repossession in your credit history marks you as a credit risk.
However, if you truly cannot afford your car payments and are falling behind, it is likely that your vehicle will be forcefully repossessed if you do not take the initiative to surrender it first. The primary benefit of a voluntary repossession is that the costs associated with the process tend to be significantly less than those associated with a forced repossession, which could save you a lot of money as you work to pay off the remaining balance of the debt.
Even if you surrender your vehicle to your lender voluntarily, the lender has the legal right to collect on any balance remaining on the debt after the car is sold at auction. This type of debt is referred to as a "deficiency balance." The creditor may even file a lawsuit against you to collect on the unpaid deficiency balance. You should therefore only proceed with a voluntary repossession if you truly cannot afford the loan, as you will likely still owe the lender a significant amount of money, even after you no longer have the use and benefit of the property.
A deficiency balance is an unsecured debt, which the law treats the same as credit card debt, a payday loan, or medical debt, among other consumer debts
***For the most part you have to be poor for this to be any good!
Many people did this in my town to get more money for the rent that
went up. When you are poor you don't care about your credit history.
In fact it takes money to have credit and many poor don't plan to buy
a new car, or get a house many are like me sometimes, have $10
in the bank before payday.
I thought about doing this myself, it would of saved me around $400+
a month for me. And I would of walked everywhere, but that would be
ok being, I have $400+ in my pocket! But my car was not that far off on
payments so I kept my car!
Having many people walk in town turns on the light of poverty in town.
People notice that! It's a chamber of commerce nightmare, with the
Republican thinking to bring many high dollar places to town to
attract the rich people in town. So they can see all the poor walking
everywhere. It scares the rich and the rich gossips and soon the word
gets out how poor your town is! That in return will bring up your pay
as the light is on how low pay the town is!
So you get the point Voluntary Repossession is for the poor, that will
never buy a new car or get a house! No need for credit as they have no
money for it!