[Ruth]

I got behind on my car to the point of repossession. To sum it up quickly I fell on hard times, lost my job then got covid pretty bad.

I’m now working again and making a very decent income. I got my four walls caught up and I have the full amount to get my car caught up however they are saying I have to pay blue book value to keep it instead of the past due amount. It has not been repossessed.

It is in my driveway. So, instead of paying them a little over two grand they are saying I owe $9,000 (blue book value).

I owe $13,000 total. I asked if they will work with me as I can pay a large chunk right now and they said no.

I am so ridiculously close to filing bankruptcy I just don’t know what to do. How bad is a repossession? I mean is there ever a situation where you should file?

Advice please.

[Naomi]

I’d ask to speak to a manager. You had a hardship and are willing to catch up today. Most credit unions and banks I know will work with that if you press hard enough. The Car isn’t gone yet. You may have to fight a lot but you can do so respectfully and firmly.

[Krista]

I will say your at their mercy not anyone else it’s a hard hard lesion as I’ve watched friends pay about 2-3k more just to get their car.

They can charge whatever they want for storage, paperwork etc.

I’m understanding your car maybe not be gone but it won’t start will it.

[Lynn]

I’m sort of in the same boat.
All I can offer is your not alone my friend. I’m now sure what I’m going to do either.

[Krista]

This sounds SUPER shady. Usually, they only want the past due. They can or might have the option to call the loan but that’s the full 13k. You, May want to seek legal advice. It SOUNDS like they want the book value to insure they aren’t getting shafted at auction. This whole thing sounds screwy. I’d ask for a copy of the original contract stating they have this option. You had a hardship and now have the money to get current. Every other bank would be welcoming you with open arms.

[Amy]

Do you still have the paperwork you signed? If you do, read through it and see what it says.

[Blanca]

If it’s a buy here pay here place most don’t report to credit bureaus go find another no payment car with what you have saved up and return the current car you have with them. And tell them you want in writing that the cars value is at the time you voluntarily surrendered it that way you have proof of what it was worth vs what they say you owe if they sell in auction and get that amount back you shouldn’t owe a dime if you do just make payments

[Elise]

It sounds like they have started to move forward with the repossession process, and likely is demanding balance in full or the market value of the car, for you to keep the car. This is not uncommon. A repossession notice / pre-intent is rarely cured, due to these clauses that are available as a remedy to the lender. They don’t want to take a 2nd risk on someone defaulting for a 2nd time.

The lender has based the car at a market value of $9k. I’d pay the balance due to them for the negative equity, which is ~$4k, and move on from them, and give the car back. Likely you are already showing multiple lates and multiple consecutive months late on your credit report. (Referencing your specific question on if it’s bad to have a repo on your credit.) At least if you surrendered the car, it would be a voluntary repossession. Or you could sell it outright and try to pay off the loan that way, but you are still upside down on the loan. But that would take time, and that might not be what you have right now before the repossession were to take place.

Remember, with the BabySteps, your one and only goal is to draw the straightest line from where you are to no debt. Which means not picking up a new loan along the way. This also trickles down to no score, which is also the goal.

I also highly doubt calling them will overturn their decision. Likely in your fine print contract, it states all available cures in the event of a default. These contracts are enforceable and very difficult to overcome the technical and legal wording in there, to an alternate conclusion. Call of course, but if you don’t get the result you are looking for, just know, it’s due to contract wording, and protection for their bottom line.

If this was me, this is what I’d do:

Ignore what it does to your credit report, we need to focus on becoming solvent.

Rather than pay $9k and still be on the hook for $4k, I’d return the car, and pay them $4k – satisfying the loan completely, regardless if it says repossess or voluntary repossession.

You then need only enough money to buy a hooptie to get you from A to B.

You have a great new job with “very decent income.”

This is your opportunity now to start fresh and move forward, without being held back by a car payment.

I’d move on from the situation, if this was me.

Congrats on the new job though. That is really cool that you are now in a new position which isn’t easy these days.

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