George Simons | October 19, 2022
Summary: Voluntary repossession gives you more control of when your vehicle gets taken away. Here is SoloSuit's guide to voluntary repossession, its pros and cons, and how it will impact your credit.
If you encounter financial hardship and suddenly fall behind on the payments being made towards your auto loan, there is a risk the bank will exercise its right to take possession of the vehicle. This is what is known as a “repossession.” Most financial institutions offering auto loans include language in the terms of the loan agreement that enable them to repossess your vehicle without even having to go to court.
A repossession does not need to be initiated by the lender. In fact, you have the option to return the vehicle to the lender or dealership and surrender your keys. This is what is known as a “voluntary repossession.”
You may want to consider initiating a voluntary repossession if you are unable to keep up with your auto loan payments and you do not see a viable path toward catching up on those payments and/or making timely future payments.
Handing over the keys to your vehicle is generally considered an unpleasant and difficult experience for many people. Nevertheless, there are benefits to taking such action that may outweigh the emotional pain of turning over your vehicle to the lender or dealership. One of the biggest benefits associated with voluntary repossession is avoiding the additional charges often levied by banks and/or dealers when an involuntary repossession is initiated. The additional costs are associated with the removal of your vehicle and impound fees.
Another benefit of voluntary repossession is that you will maintain a level of control over the situation, which basically means you retain the option of deciding when it makes sense to hand the vehicle over to the lender or dealer, as opposed to a surprise involuntary repossession.
Voluntary repossession also gives you the chance to remove any and all personal belongings that may be in the vehicle. In contrast, if your vehicle is repossessed involuntarily, you run the risk of personal items being lost or damaged.
Finally, when you voluntarily give up your car for repossession, you avoid the embarrassment of others witnessing the repossession because you have control over it.
How does the repossession process work?
When a lender decides to initiate a vehicle repossession, it is important to understand that they are under no legal obligation to provide you with any advance notice. They also reserve the right to enter onto your property to reclaim the vehicle. In most instances, a towing service will be retained by the lender and they will visit your home or place of business to obtain the vehicle. That towing service will likely deposit your vehicle at a local storage facility. The towing service charges a fee for this work and the storage facility charges fees for the amount of time the vehicle is stored. As mentioned earlier, these costs will be passed on to you.
The actual process of surrendering your vehicle for voluntary repossession includes the following steps:
A negative aspect of initiating a voluntary repossession is that it does nothing to mitigate the potential harm to your credit score. Even if you successfully complete a voluntary repossession, the payments you missed on the auto loan will still appear on your credit report. In addition, the repossession itself will likely go on your credit report. If that wasn't bad enough, both the missed payments and repossession will remain on your credit report for around seven years.
Another drawback to a voluntary repossession is that it does not alleviate the amount you owe on the auto loan. As mentioned earlier, the lender will likely try to resell your vehicle on the open market or at an auction. If the vehicle sells, the proceeds will be applied to the sale proceeds. If the sale price is less than the loan balance, you would still be responsible for the remaining balance left on the loan.
Initiating a voluntary repossession may be helpful if you are unable to make timely car payments each month. If you succeed in voluntarily turning over your vehicle to the lender, it could save you a decent amount of money in fees and charges associated with an involuntary repossession. However, a voluntary repossession will typically hurt your credit score.. As a result, deciding on whether to move forward with a voluntary repossession will depend on your unique circumstances.
If you're struggling to make your car payments because you have other debt obligations, you can fight back against debt collectors and win.
When debt collectors come after you with a lawsuit, you can beat them in court by responding to the suit with a written Answer. You can follow these three steps to answer a debt collection case:
Learn more about these three steps in this video:
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James
You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now or are just looking for support, we're here for you.
>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate
>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)
Here's a list of guides for other states.
Being sued by a different debt collector? Were making guides on how to beat each one.
Is your credit card company suing you? Learn how you can beat each one.
Going to Court for Credit Card Debt — Key Tips
How to Negotiate Credit Card Debts
How to Settle a Credit Card Debt Lawsuit — Ultimate Guide
Need more info on statutes of limitations? Read our 50-state guide.
Why do debt collectors block their phone numbers?
How long do debt collectors take to respond to debt validation letters?
What are the biggest debt collector companies in the US?
Is Zombie Debt Still a Problem in 2019?
If a car is repossessed, do I still owe the debt?
Is Portfolio Recovery Associates Legit?
Is There a Judgment Against Me Without my Knowledge?
Should I File Bankruptcy Before or After a Judgment?
What is a default judgment?— What do I do?
Summoned to Court for Medical Bills — What Do I Do?
What Happens If Someone Sues You and You Have No Money?
What Happens If You Never Answer Debt Collectors?
What Happens When a Debt Is Sold to a Collection Agency
What is a Stipulated Judgment?
What is the Deadline for a Defendants Answer to Avoid a Default Judgment?
Can a Judgement Creditor Take my Car?
Can I Settle a Debt After Being Served?
Can You Appeal a Default Judgement?
Do I Need a Debt Collection Defense Attorney?
Do I Need a Payday Loans Lawyer?
Do student loans go away after 7 years? — Student Loan Debt Guide
Am I Responsible for My Spouses Medical Debt?
Should I Marry Someone With Debt?
Can a Debt Collector Leave a Voicemail?
How Does Debt Assignment Work?
What Happens If a Defendant Does Not Pay a Judgment?
How Does Debt Assignment Work?
Can You Serve Someone with a Collections Lawsuit at Their Work?
How Many Times Can a Judgment be Renewed in Oklahoma?
Does Debt Consolidation Have Risks?
What Happens If You Avoid Getting Served Court Papers?
Does Student Debt Die With You?
Can Debt Collectors Call You at Work in Texas?
How Much Do You Have to Be in Debt to File for Chapter 7?
What Is the Statute of Limitations on Debt in Washington?
How Long Does a Judgment Last?
Can Private Disability Payments Be Garnished?
Can Debt Collectors Call From Local Numbers?
Does the Fair Credit Reporting Act Work in Florida?
The Truth: Should You Never Pay a Debt Collection Agency?
Should You Communicate with a Debt Collector in Writing or by Telephone?
What Happens After a Motion for Default Is Filed?
Can a Process Server Leave a Summons Taped to My Door?
Need help managing your finances? Check out these resources.
How to Make a Debt Validation Letter - The Ultimate Guide
How to Make a Motion to Compel Arbitration Without an Attorney
How to Stop Wage Garnishment — Everything You Need to Know
How to File an FDCPA Complaint Against Your Debt Collector (Ultimate Guide)
Defending Yourself in Court Against a Debt Collector
Tips on you can to file an FDCPA lawsuit against a debt collection agency
Advice on how to answer a summons for debt collection.
Effective strategies for how to get back on track after a debt lawsuit
New Hampshire Statute of Limitations on Debt
Sample Cease and Desist Letter Against Debt Collectors
The Ultimate Guide to Responding to a Debt Collection Lawsuit in Utah
West Virginia Statute of Limitations on Debt
What debt collectors cannot do — FDCPA explained
Defending Yourself in Court Against Debt Collector
Arkansas Statute of Limitations on Debt
Youre Drowning in Debt — Heres How to Swim
Help! Im Being Sued by My Debt Collector
How to Make a Motion to Vacate Judgment
How to Answer Summons for Debt Collection in Vermont
North Dakota Statute of Limitations on Debt
ClearPoint Debt Management Review
Indiana Statute of Limitations on Debt
Oregon Eviction Laws - What They Say
CuraDebt Debt Settlement Review
How to Write a Re-Aging Debt Letter
How to Appear in Court by Phone
How to Use the Doctrine of Unclean Hands
Debt Consolidation in Eugene, Oregon
Summoned to Court for Medical Bills? What to Do Next
How to Make a Debt Settlement Agreement
Received a 3-Day Eviction Notice? Heres What to Do
How to Answer a Lawsuit for Debt Collection
Tips for Leaving the Country With Unpaid Credit Card Debt
Kansas Statute of Limitations on Debt Collection
How to File in Small Claims Court in Iowa
How to File a Civil Answer in Kings County Supreme Court
Roseland Associates Debt Consolidation Review
Do Debt Collectors Ever Give Up?
Can They Garnish Your Wages for Credit Card Debt?
How Often Do Credit Card Companies Sue for Non-Payment?
How Long Does a Judgement Last?
How Long Before a Creditor Can Garnish Wages?
How to Beat a Bill Collector in Court