The threat of vehicle repossession can upend your life. However, there are steps you can take to halt the process and keep your car.
Quick action and understanding your options often make the difference. First, you need to know the various strategies that might help you avoid repossession and regain control over your financial situation.
Exploring funding options to catch up on payments
One way to stop repossession is by getting another loan or finding other sources of funding. This approach allows you to catch up on missed payments and reinstate the loan.
However, it may not be possible for everyone to get another loan, especially if credit scores are low. Still, it is worth exploring all avenues, such as assistance from family or friends, as well as alternative lending.
Communicating with the lender to modify terms
Once repossession is on the table, talk to the lender as soon as possible. Lenders often prefer to avoid repossession and may offer solutions like modifying loan terms, refinancing or deferring payments.
Modifying the loan can involve extending the term or reducing monthly payments. Deferring payments means skipping them temporarily, which can provide short-term relief.
Selling the car or voluntary surrender
If catching up on payments is not an option, consider selling the car yourself to pay off the balance. Selling the car privately often yields a better price than through repossession.
Voluntary surrender is another option. Surrendering the car voluntarily can be less damaging to your credit than having it repossessed. The lender usually appreciates this approach since it saves on repossession costs.
Filing bankruptcy
Filing for bankruptcy can stop repossession if you do it within ten days after receiving the first repossession notice. For example, Chapter 13 bankruptcy allows you to reorganize and pay your debts over time. It provides protection from creditors and can give you breathing room to catch up on missed payments. It is a powerful tool but requires immediate action within the specified timeframe.
Repossession is a tough scenario to navigate, but quick action can make a difference. Be sure to consider all of your options and get sound advice on how to proceed.