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What is the Impact of a Voluntary Repossession


Let’s talk about the legal impact of a voluntary vehicle turn in or voluntary repossession. Hi, my name is Mike Ziegler. I’m the managing attorney for the Debt Fighters. We’re a Florida law firm committed to helping consumers eliminate serious debt.

Very common question I get is, Mike, I voluntarily turned in my vehicle, or I’m thinking about doing so. What is going to be the impact? Is it any better than letting the car lender just come and take the vehicle themselves? Let’s just build out that scenario first. In most instances, when you first purchase a vehicle, you’re getting a car loan. You have monthly installments to make on that car loan. Sometimes for better or worse someone’s situation changes or duration, the time that they own that vehicle. They may not be able to maintain the payments anymore because of whatever life events that have occurred. What is the best way of going forward and mitigating the impact of whatever changes you have to make?

Usually, there’s two different paths you can take. You can voluntarily turn the vehicle over, or you can wait until the lender comes to collect it on their own, sends the repo guy in the evening, and it’s missing from your driveway in the morning. In either scenario, after the vehicle has been taken back by the lender, they are going to usually put the vehicle up for auction and sell it for whatever comes out of the auction. After that auction is over, the lender is going to square up on the balance. They’re going to look at the cost to recover the vehicle. In other words, whatever they had to pay the repo guys.

If there’s any storage fees for the vehicle before the auction took place, they’ll add in those charges. They’ll add in the charges associated with the auction, and then they will deduct out whatever they’re able to recover from the vehicle from the auction. As you might imagine, you’re not getting retail price at the auctions. I’ve seen quality vehicles sell for under $1,000 in the auction countings. Now that’s not most auctions, but just generally understand that it’s going to sell for a lot less than what fair market value probably would be. After that equation has been calculated out, that is going to result in a deficiency.

Generally, the lender is going to ask the borrower to pay the balance of the deficiency. Once it’s in that deficiency status, the lenders usually aren’t offering the same degree of customer service that maybe they were before when you were on regular installment payments. Sometimes they’ll ask that the entire balance be due, but you can always call them and in many instances make arrangements. Now just because a vehicle has been sold doesn’t mean that there can’t be some options. A lot of times the balance can be negotiated. If the vehicle deficiency is a symptom of a number of debts that you’re having trouble with, it may be worth considering a debt consolidation or bankruptcy.

If you want assistance in evaluating these options, I encourage you to give my office a call for a complimentary consultation with one of our experienced attorneys. We’ll evaluate the vehicle deficiency and any other balances you may have and see what options may be available to you.

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