REPO WORRIES
Hello,
I have no choice but to allow my car to be repossessed. I can not afford the payments. I realize this will ruin my credit. My question is other than the credit issue what can happen to me? Can police action be taken? I am not trying in any way to cheat the financial institution. I am giving my car back as soon as I figure out how, the payment is not even past due yet. I just do not want the police department to show up and arrest me over this. Can you help with any of these questions?
Thank You,
Jamie
Jamie,
Uncle Jim is not an attorney. Therefore I can not give legal advice.
Uncle opinion:
I don’t think the police will come knocking. Auto repossession is a civil matter not criminal.
You do have other choices. Creditors are less likely to take legal action if at least some payment is received. Sending a monthly payment, even less than the full amount, might result in some additional interest payment but should (at least) postpone legal action. During this time you can try to increase income, shift debt to credit cards or equity lines, recast the loan (make the monthly payment lower over a longer period of time), borrow from a 401(k), withdraw from an IRA, and explore all possibilities. Three months of missed payments should be avoided.
To the best of my experience, creditors do not take legal action immediately after one late payment. For whatever reason, most of us pay late on occasion. True, late payments can hurt your credit, but occasional late payments in this credit driven society are minor bumps along the financial highway. Not to be ignored, but you will not be sacrificed to the credit god.
Repossession solves nothing! DON’T DO IT!
REPOSSSION DOES NOT CANCEL DEBT
You will still owe every penny PLUS repo costs. See my columns below for more information.
If you put down an initial payment when you purchased the vehicle and/or have made a large number of payments on it, you might have more equity in the car than debt. Compare your present value to the amount owed. If it is worth more than owed (as it should be) your position is much better. See other columns on UPSIDE DOWN or NEGATIVE EQUITY.
Talk to individuals with loan experience. Your local bank might be able to help or at least provide some guidance.
Don’t panic; make your best effort; I think it will work out.
Everybody’s Uncle
