Advice on Effects of Repossession

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jassica

Joined: 13 Sep 2009
jassica's page
Posts: 76

10 Magic Points

Subject: Advice on Effects of Repossession

Mon Oct 05, 2009 2:55 pm

my daughter and i co-signed for an auto loan. i am in the process of filing bankruptcy and she cant afford to pay it on her own. how will this affect her credit and what would be least impactful. voluntary repossession, reposession or include in bankruptcy filing.

goodnatured

Joined: 03 Nov 2007
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Posts: 3927

10 Magic Points

Tue Oct 06, 2009 1:42 am

It will definately leave a blemish on her report. Can she try to refinance it and get a lower payment that she can afford. You probably should call the company that you financed the car through and explain your situation, they may be able to work something out with you. Give it a shot, you may be surprised at their response.

Justin

Justin

Joined: 17 Jul 2006
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Posts: 1240

28942 Magic Points

Tue Oct 06, 2009 5:40 am

Hi Jassica,

Whatever you and your daughter do now, will leave a negative impact on the credit reports. I agree with goodnatured, that she should try and find out if there is any to refinance the loan, so that she is able to pay it at a lower interest rate.

As far as voluntary repossession and bankruptcy are concerned, both have their pros and cons. Voluntary repossession can save your daughter if the entire debt amount can be repaid after selling the car at an auction by the creditor. Sometimes, even after selling the vehicle , the amount falls short and then the creditor might harass you again for that balance. Repossession stays on a credit report for 7 years just like any other negative item stays on it.

However, if you are thinking about bankruptcy, then you have two options – chapter 7 and chapter 13. Under chapter 7 bankruptcy, which is also termed as the liquidation bankruptcy, you can sell the item to pay back the debt. Under chapter 13 bankruptcy, you will require to pay the debt through a repayment plan with the consent of the creditor and under the supervision of the court. However, a bankruptcy stays on your credit report for 10 years.
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All the Best Smile

Justin

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