Monthly Archive April 20, 2021

What Is Auto Repossession?

What Is Auto Repossession?

What Is Meant by Auto Repossession?

If you miss your auto loan payments, it makes you default on your loan. In that case, your creditor has the right to take your car back at any time. Not to mention, the auto repossession can impact your credit report for a longer time.

During repossession, your leasing company or lender that has the lien of your vehicle can take your car if you are behind in your monthly payments. In several states, the lender can even hold your car as soon as you miss a single payment. In Florida, your lender doesn’t have to give any notice to seize your car. But they don’t have any authority to threaten or physically force you. If this happens, the lender needs to pay the penalty and compensate the damages if they occurred.

On the other hand, some states ask lenders to send the notice before repossessing your vehicle. This notice should have detailed information about when you miss the payments. They also need to give you a deadline to pay off the payments. Besides that, your lender can also use a starter interrupt device. They do this to deactivate your car remotely. Although repossession policies can differ from state to state, your lender doesn’t have the right to bring a tow truck to possess your vehicle. Generally, the lenders also have to return all the belongings you have in your car.

How Can Repossession Hurt Your Credit?

The following are some ways in which vehicle repossession can impact your credit.

·         Late Payments

If you get into auto repossession because you miss a payment, the late payment label will stay on your credit report for seven years from the original late payment date.

·         Collections

If you still owe a great amount of money on an auto loan, your lender may hand this matter to the collection agency. Again, the collection amount will remain on your credit report for almost seven years.

·         Court Judgment

If you don’t pay your loan to a collection agency or auto lender, you may have to face legal actions. This can remain on your credit report for seven years but could remain on your public court records up to ten years depending on state laws.

How Long Does Repossession Stay on Your Credit Report?

Repossession can stay on your credit card for almost seven years from the day you stopped making monthly minimum payments. They are a red flag for your credit scores. You may even have to face a significant toll on your finances.

If you default on your dues for 30 or more days, the creditor can report your account as delinquent. After that, you may face more problems, as they can take the matter to the debt collection agencies. All of these things can lead your credit score to plummet. Not to mention, it will also hamper your ability to borrow money in the future.

Lastly, you need to understand that you still owe a deficiency balance after getting into the repossession. This is a loan amount left after the creditor sold the collateral, such as your car in this case. If your outstanding balance is more than they can get from the sale or auction of your vehicle, you will have to pay for the remaining amount.

Bottom Line

Auto repossession is one of the challenging matters to deal with, as it impacts your entire financial state. This is why it’s better to pay at least monthly minimum payments to prevent this problem. Inquire now for questions and answers regarding your credit repair journey.

What it means and How to Get out of Student Loan Collections?

What it means and How to Get out of Student Loan Collections?

What Is Student Loan Collection?

Student loan collection is a nightmare for most people. When a person stops paying monthly payments of their student loan, they end up getting into the student loan collections. Their student loan can get into default or sell to a debt collector. Not to mention, loan collections can lead to several consequences.

Fortunately, there are many things you can do to deal with this problem. Read further to understand what you need to do.

How to Get Out of Your Student Loan Collection?

Here are some ideas that can help you solve this issue.

Consolidation of Your Student Loan

It is the simplest and easiest method to stop calls from loan collection agencies. Consolidate all of your loans into one bigger loan, including default federal loans. Your loans get out of the default once you consolidate them. This method is a federal program to help people. You don’t need to pay for anything in the consolidation process. It usually takes 1 to 3 months, based on your applying method, online or paper.

However, this option is not for you if

  • You come in active wage garnishment.
  • You already opt for the consolidation loan.

Settle Your Debt

People who default on either federal or private student loans can get out of the collection by settling the debt. You need to contact the collection agency when you have notified them and explain to them your circumstances. Try to discuss your options to get a reasonable solution. Moreover, you can negotiate with the agency that you can pay off less than you owe. For instance, a person who owes a student loan of $20,000 could possibly pay $10,000 through negotiation.

Making a settlement can be challenging for you. But if the debt agency agrees to it, you will have to pay the amount in a lump sum. This is why you need to have a great amount of cash.

Pay the Entire Amount

Although it is impossible for some people, it is the quickest method of all. You can ask your family or friends to help you pay the outstanding balance. You can also take an extra job to earn the money you want to pay off the debt.

Yes, these options are pretty difficult, but it is far better than allowing debt collection to hurt your credit score.

Declare Bankruptcy

If you cannot achieve any of the mentioned methods, the last thing you can do is declare bankruptcy. Generally, student loan collections are difficult to resolve after bankruptcy, but that doesn’t mean it is impossible.

For qualifying, you need to prove your eligibility to the court, such as a medical problem that does not let your work properly. You also need to prove that it is almost impossible to pay the debt while maintaining a decent living. Declaring bankruptcy can affect your life greatly. So, ensure that you have explored all the possible solutions before it.

Bottom Line

In a nutshell, you can get rid of student loan collections by declaring bankruptcy, paying off the loan, settling your debt, and through the consolidation process. Make sure to estimate the consequences of each method to pick the best options for yourself.