Has your car payment left you feeling in over your head? Many clients in the same position eventually consider returning their car voluntarily to a company who might soon be repossessing it anyway. This is called a “voluntary repossession.“
Is voluntary repossession a smarter option than declaring bankruptcy and getting an automatic stay? Here’s what you need to know.
You may still owe some money on the car.
When you return the car it will be auctioned off to a new owner. However, the car will generally be auctioned for far less than it’s worth. The difference between what it fetches and what you owe may be even greater than the difference between the car and it’s worth thanks to interest rates and fees.
The price of the car will be deducted from what you owe, but the car company will continue to try to collect. They may even sue you to get what they want, which can come with a whole host of unpleasant consequences.
Your credit will be impacted more or less the same way.
A voluntary repossession looks just like a regular repossession on your credit report. It remains on your report for seven-and-a-half years from the date you began getting behind on your payments.
If you’re contemplating voluntary repossession to save your credit you should be aware this tactic will not work.
Voluntary repossession is really only good for making sure you don’t get stranded by a surprise repo either at home or at work.
Filing for bankruptcy will help you protect yourself.
Let’s face it. Unless you live in a major metropolitan area with truly outstanding public transportation options, you probably need your car. If you’re behind on your payments it’s smarter to find a way to keep the vehicle in your driveway.
If you think you’re in danger of losing your car it may be time to reach out to an experienced bankruptcy attorney. Filing for bankruptcy will grant you an automatic stay, which will allow you to keep the car while we help you navigate the bankruptcy process. You may even be able to keep the car in the end, while placing yourself in a better financial situation overall.
For more information on how bankruptcy impacts car ownership in Philadelphia, click here.
So before you turn over the keys call us, the attorneys at Sadek and Cooper. We offer a free consultation, fair payment plans, and a way back to financial stability.