Getting behind on car payments is not something that is taken lightly by finance companies. In order for them to recoup the amount owed, more times than not they choose the option of repossessing your vehicle. This does not solve their issue completely. In nearly every case the value of your vehicle will end up being less valued than the money that is owed which in return will likely result in you having to face residual debt after your vehicle is taken away. This blog will illustrate when a lender can put forth the action of repossessing your vehicle and what issues you will have to face after that.
What Repossession Means
Whether you choose to finance your vehicle or lease it repossession can occur in either circumstance.
If your vehicle is leased, the seller of that vehicle will reserve the ownership of that vehicle. In your agreement with the lease company, the contract you have agreed to will allow the leaser to retain your vehicle in the case where you are unable to make your lease payments.
Is your vehicle purchased? Then you are the owner of that vehicle; however the lender will apply for a lien against your vehicle as a way to guarantee payment. Again if you are unable to make your payments they will exercise the legal authority to repossess your vehicle.
When you are unable to make payments, you will be notified however the lender is not entitled to give you notice if someone is coming to repossess your vehicle. This is known as an involuntary repossession. In an event that you already know you can’t afford the vehicle any longer, you can give it in willingly which is known as voluntary repossession.
Loan Deficiencies
Once your vehicle is repossessed it does not mean that your payment for your loan or finance is cancelled.
After the vehicle is seized the lender is allowed to sell it. Whatever is made from the exchange will be reduced from the balance that is currently owed. All other fees such as repossession costs, late payment fees, interest charges and any other miscellaneous fees will be added. The remaining is now an unsecured debt that you still have to pay to the seller.
Late payments will also be reported and will show on your credit report. This will take an effect on your total score. Up to seven years is the time that this will be intact along with your credit report.
How Not To Get Repossessed
You must make arrange payments with the lender that will ensure that you will recover your payments that are remaining and any fees that were charged during the repossession or recovery of the vehicle.
Thinking of filing for bankruptcy? This won’t prevent the repossession due to the fact that the auto lender is a secured lender as they are not prohibited by the automatic stay in bankruptcy or consumer proposal from enforcing their security rights.
If there is trouble in making your payments because of other debts like credit cards or high paying loans, you may be able to file an insolvency proceeding by contacting us and getting in touch with a Licensed Insolvency Trustee to help you clear this debt which will allow you some breathing room and cash flow so that you can catch up to your payments and resume with the current car finance or lease as well
After Repossession
After all if the decision is made to leave from your current vehicle loan or in a case where the vehicle has already been taken away, you may be eligible to file bankruptcy or proposal to get rid of the remaining amount that is owed.
Getting a vehicle repossession doesn’t mean that it will continue to tread you towards difficult financial times. Even though bankruptcy is not recommended to only solve your issue with a car loan, it may be an option if there are other outstanding debts as well or a proposal to help with all the debt you are surrounded in.
Get into contact with one of professionals today if you face this type of situation and allow us to navigate you out of debt.
