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How to keep the car when an auto loan is charged off

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Carol
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Your car loan is charged off when you have been delinquent on your account for 180 days. The lender writes off this debt as a loss, as they realize that the debt won't be paid. An auto loan charge-off is a negative mark on your credit report and it hurts your credit score. A loan charge-off does not mean that the loan has been forgiven, and you are still obligated to pay the debt. The interest and late payments will continue to accrue. Generally a charged off debt is handed over to a collection agency.

Can you keep the car after charge-off?

You can keep your car after the charge-off only if you pay off the debt. The lender won't release the lien on the car until the loan is repaid. The car can be repossessed if you do not pay off the debt. Even if the lender does not seize the car, you won't be able to sell it or refinance it. Moreover, you are still liable to pay off the debt even though you have lost your car.

However, repossession laws differ according to the state you live in. Thus, you need to know your state law regarding car repossession. Some states allow the lender to seize your car without notice at any time after you fail to make the payments on your car loan. But, most of the states have a breach of peace regulations on car repossession. If the individuals repossessing your car commit a breach of the peace while seizing your car, your lender may have to pay a penalty and the repossession may be temporarily halted.

How to handle an auto loan charge-off

If you want to keep your car and remove the charge-off from your credit report, you will have to negotiate a payment plan with your lender. Make sure you get the payment agreement in writing. Once you pay off the debt, you may get the car back. As for the charge-off, you will have to negotiate a Pay for delete Agreement (PFD) with your lender to remove the charge-off from your credit report. A charge-off will be considered a negative listing on your credit report, which will cause creditors and lenders to deny you credit. Therefore, it is better to try and remove the charge-off with a PFD if the lender will agree.

The best way to prevent your car from being repossessed is to repay the loan. There are several options, like a loan modification agreement, available to consumers who wish to keep their vehicles.
 

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rachael



Joined: 11 May 2009

Posts: 234
6581 Magic Points
PostPosted: Wed Jun 03, 2009 8:49 am    Post subject:

Hi justin.oscar,

A charge-off does not mean that you will not have to pay down the debt. It means that your creditor has written your account as a loss for his company, because you have defaulted on loan payment for a continuous period of 6 months or more. It is likely that a collection agency is continuing with the collection practice for your account. They have given you only 2 weeks time, so you do not even have the time to ask for debt validation.

If you do not pay within the 2 weeks time period, the CA can take legal action against you. If they win the case, they can get an order from court to garnish your wages, to pay off the debt. I think you should pay the installment amount the CA has mentioned, after you come to a pay for deletion agreement with them. You will find a sample Pay for Deletion Letter in the Letters of Credit section.

If you do not pay off the debt, interest will keep accruing. It is also possible that the CA would add to it the amount involved in the legal proceedings.

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scott

scott

Joined: 28 Jun 2006

Posts: 446
10878 Magic Points
PostPosted: Wed Jun 03, 2009 9:13 am    Post subject:

Hi justin.oscar,

Whether your car will be repossessed by your creditor/collection agency, depends on them. Even if your car is repossessed and sold off to pay the debt, you will still be liable to pay if any balances are remaining. You will also have to repay for any costs involved in the whole transaction.

I think the best option is to accept the payment offer that the creditor/CA has given to you. In that case you can retain your car and also avoid unnecessary legal complexities.

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SCOTT

Use your credit account responsibly and enjoy a debt free life.
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justinoscar



Joined: 03 Jun 2009

Posts: 2
194 Magic Points
PostPosted: Wed Jun 03, 2009 8:12 pm    Post subject: thanks

Thanks for the replies guys. I just had another car repossed on myself within the same time period so I am finding it hard to get the money for this together at this moment.
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Jesse
Guest





0 Magic Points
PostPosted: Mon Jul 27, 2009 5:48 pm    Post subject: charge off car

I have a car that was charged off over three years ago. I was never contacted by anyone and noone ever tried to repo the car. This car is clunker does not run or work... what do I ? how can I get rid of the car ?
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SamJackson
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PostPosted: Wed Oct 21, 2009 11:06 pm    Post subject: chargr off repo of car

My car was charged off and the repo people are trying to take it. I sent a payment to the creditor which is not the repo company.Will that payment be subtracted from the amount I owe?
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debranewell2008



Joined: 10 Oct 2009

Posts: 594
99 Magic Points
PostPosted: Wed Oct 21, 2009 11:22 pm    Post subject:

It should be. If you want you could send them a pay for delete letter to see if they are willing to remove the charge off from your credit report once you have paid the debt in full. No guarantees but it's worth a try.
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fishback
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0 Magic Points
PostPosted: Sat Oct 24, 2009 3:20 am    Post subject: car

can i get a loan to pay the settlement they offered, can they still repo it? will i be in trouble?
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StephanieV
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0 Magic Points
PostPosted: Wed Oct 28, 2009 6:44 pm    Post subject: Bankruptcy

I recently moved, could not pay for my car that doesn't run, but the car lot has not repo'd the car. Instead, they sent the debt to collections. If I file for bankruptcy, will I be able to keep the car? or will the car lot come after it?
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debranewell2008



Joined: 10 Oct 2009

Posts: 594
99 Magic Points
PostPosted: Wed Oct 28, 2009 8:27 pm    Post subject:

Hi Stephanie,

It all depends on the bankruptcy you file if you file chapter 7 and include the car they will come get it. If you file chapter 13 which is a repayment plan and you want to keep the car it is a secured debt so you will still have to pay them every penny you owe them through the plan.
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christy
Guest





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PostPosted: Tue Dec 08, 2009 3:22 pm    Post subject: bankruptcy

so say i want to file bankruptcy chapter 7 and dont include the car then what will happen ..
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debranewell2008



Joined: 10 Oct 2009

Posts: 594
99 Magic Points
PostPosted: Tue Dec 08, 2009 3:42 pm    Post subject:

if you keep the car then you have to continue making the payments. If not then they can repo the car.
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QUINN
Guest





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PostPosted: Tue Jan 05, 2010 12:35 am    Post subject: car loan

i just miss my first payment cause i just got a new car cant pay for the other car what should i do with it still o 6500???
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debranewell2008



Joined: 10 Oct 2009

Posts: 594
99 Magic Points
PostPosted: Tue Jan 05, 2010 1:59 pm    Post subject:

you could try selling it. Some car dealerships will buy the car back from you check with them. Some will take them back if you have lost your job or something that can not be helped. Give them a call.
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Monica65
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PostPosted: Sat Jan 23, 2010 3:16 am    Post subject: lein sale

I financed a car that was sold in a lein sale. I still have a balance. How will this effect m credit and do I have to continue to repay the loan?
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