Question: How does a repossession affect my credit?
A: Having a repossession on your credit report can seriously harm your overall credit scores. This can affect your ability to take out loans or qualify for anything else that requires a credit check.
Question: How long will a repossession stay on my credit report?
A: Having your vehicle repossessed will stay on your credit report for up to 7 years. While the impact of the repossession will reduce over time, it can still negatively affect you the entire time it appears on your credit report.
Question: Why do repossessions happen?
A: A repossession usually occurs when people stop making monthly payments on their auto loans.
When you take out an auto loan to purchase a vehicle, the bank that gives you the loan is technically the owner of the car until the loan is entirely paid off. If you do not pay back the full amount of the loan and stop making payments, then the bank has the right to repossess the vehicle.
Once your loan is in default, your creditor can seize your vehicle at any time. In many states, banks don’t even need to inform you that they plan to repossess your vehicle. Creditors typically sell repossessed vehicles in an attempt to recoup the money they loaned.
Question: What if my vehicle was voluntarily repossessed?
A: It doesn’t matter if the bank has taken your car or if you have voluntarily surrendered it, your credit report will still be negatively affected. Either way, a repo will cause major damage to your credit.
Question: Can I be sued for my unpaid balance?
A: Your creditor can do more than just seize your vehicle, they can also sue you for the amount they need to pay off their initial investment.
For example, if you still owed $15,000 for a car that was repossessed by the bank and the bank sold that car for $10,000, they can file a lawsuit against you for the remaining $5,000. If the bank decides to sue you for the remainder, then you will also end up having a judgment on your credit report.
Question: Can a repossession be removed from my credit report?
A: There is chance that you can have a repossession taken off your credit report before the 7 year period is up. Some banks will let you renegotiate your payment terms in order to allow you to pay them off more easily. If a bank agrees to do this, they will sometimes take the repossession off of your credit report. If a bank does agree to delete the repo from your credit after you make your payments, be sure you get the agreement in writing.
You can also file a dispute with the major credit bureaus. If the lender can’t verify that the repossession is valid or fails to answer your dispute within 30 days, it can be deleted from your credit report.
Question: Will I be able to get a car loan after my vehicle has been repossessed?
A: You can get a car loan after a repossession, but you will first need to have the repo removed from your credit report. Most lenders usually won’t give you a car loan if you have a repossession on your credit report. If a lender does approve your loan, the amount of interest you have to pay will be enormous, which means you can end up paying 3 to 4 times what the car is actually worth.
Speak to a Chicago Repossession Attorney Today
At Atlas Consumer Law, we have a proven track record of success when it comes to helping clients with their repossession cases. When you choose our firm to represent you, we will do everything possible to provide you with a debt solution strategy that will allow you to continue working towards your financial goals. Facing repossession can be a scary and stressful experience, but we are here to help guide you and ensure your rights are fully protected.