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After a voluntary auto repossession, your credit report gets a bad hit. My question is after the auto is sold at auction and there is a differences they will try to collect the differences from you. If you refuse to pay that amount does your credit report get hit again with a bad mark? If you get a repossession on your credit report for turning the auto in then why would you want to pay that amount of money they are trying to collect from you?

5 Comments »

1. 

   If you surrender your vehicle to your lender voluntarily, the lender has the legal right to collect on any balance remaining on the debt after the car is sold at auction. This type of debt is referred to as a "deficiency balance." The creditor may even file a lawsuit against you to collect on the unpaid deficiency balance. You should therefore only proceed with a voluntary repossession if you truly cannot afford the loan, as you will likely still owe the lender a significant amount of money, even after you no longer have the use and benefit of the property. You should pay the deficiency balance off because this will be a problem for many years to come. If you ever want to buy another vehicle, buy or refinance a home, rent, or seek employment this outstanding deficiency balance can make any of these goals very difficult to accomplish.

   A repossession will appear on your credit report and result in a significant negative mark to your credit history. A repossession will appear on a credit report for 7.5 years from the date of first delinquency. You will likely see your credit score drop substantially, as having a repossession in your credit history marks you as a credit risk. Once the vehicle is auctioned off, and if you are left with a deficiency balance, that balance can be bought by a collections agent. The collection agent can report to the credit bureaus that you still owe the difference. Your credit will continue to be negatively impacted as a result. You may not be able to repair your credit until this balance gets resolved.

   I hope this information helps you Find. Learn & Save.

   Best,
   Bill
   http://www.bills.com/blog/

   Comment by Bills.com — May 18, 2010 @ 4:14 pm

2. 

   Yep, if there is a difference between what they get at auction and what is owed then they will come after you for the difference. If you do not pay you will not only get a bad mark against your credit you will also get collections people bugging you. They can follow you around for a few years depending on statute of limitations. If they get a judgment against you then they can get even more aggressive and follow you around for longer.

   Comment by A.Mercer — May 18, 2010 @ 4:14 pm

3. 

   Suppose you sold a car to someone for 20,000 dollars.
   And the guy you sold it to didnt’ pay after his 6th payment.
   You repo the car.
   You sell the car, but you could only get 5,000 for it.

   Wouldn’t you want to go after the guy for the other 15 grand?
   Or would you just be out that money and go on your way?
   /

   Comment by Judy — May 18, 2010 @ 4:14 pm

4. 

   Yes…they can come after you, the repo goes on your record and the collection goes on your record. If they write off the collection account, you then get hit having to pay taxes on the difference – and they can still try to collect.

   Comment by Steve D — May 18, 2010 @ 4:14 pm

5. 

   You can use this credit monitoring service to pre-estimate future scores for different scenarios of such payments – buildcredit.ifastnet.com

   Comment by Larry — May 18, 2010 @ 4:14 pm

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