Don’t Fear The Repo: How To Rebuild

It’s every car owner’s worst nightmare: you wake up one morning, ready to go to work, and there’s one less car in the driveway than you expected. You call the police to see if it’s been found stolen, but they let you know it’s being held at Bubba’s Towing and Wrecking, three months delinquent on its loan. Maybe you were falling behind on your payments but you still thought you could catch up… but now it’s too late. Maybe it was a technicality, some issue with your registration or insurance that you didn’t even realize you had until the car went missing. Either way, it’s Time to ask the tough questions and figure out how to rebuild.

Problem: “Help! My iPad and work computer were in there!”
Solution: The bank isn’t allowed to keep or sell possessions of yours found inside the car. You have the right to go where your car has been towed to, and recover your belongings. In many states, lenders are required to inventory the car and send you a list of what was left inside as well.
Problem: “I just spent $1500 to put in the loudest subwoofer in Chicago!”
Solution: Sorry… while you can get your belongings inside the car back, upgrades, options and repairs are considered part of the car. Hopefully you learned your lesson and won’t spend your car payment money on bass next time. If there’s any bright side, the car might sell for more at auction.
Problem: “They didn’t just take my car, they ripped the garage door off to get to it!”
Solution: That’s illegal. It’s your repo man and lender’s responsibility to pay for repairs quickly and fully. Unfortunately, it’s not like a criminal case where you can invoke the 4th amendment and get the entire repo thrown out, and have your car back for free too. But at least you don’t have to pay the contractors.
Problem: “My bonus is coming in two weeks. Can I get my car back? Please?”
Solution: Yes you can! Talk to the bank, as soon as you can, and work out a repayment plan, which will usually involve paying back the delinquent balance immediately to get your car back, then an extended term, higher interest rate or both for the rest of the loan. But at least your car is back, and your loan may no longer show as defaulted on your credit report (the previous late payments will still reduce your score though)
Problem: “But I can’t get to work anymore without my car, I’ll only fall farther behind!”
Solution: You’ll have to work with what you’ve got. Look into public transit and carpools. Ask around at work, maybe a coworker can give you a ride for the next couple of weeks until you have your car back. You may even find you weren’t as attached to driving as you thought and can live with only one car in your household. Worst case scenario, you have to use Lyft for a while, and it may be expensive, but you’ll still come out ahead by getting the repo settled.
Problem: “I couldn’t get it paid off in time, they took my car away, and I still owe MORE?!”
Solution: This is called a deficiency sale, and can happen when a car sells for less at auction than you owed on it. Of course when the reverse happens the bank gets to keep the profit. But banks being banks, if they can squeeze you for a little bit more while you’re already broke and out of a car, they will. If you think they are asking an unreasonable amount, however, you can request an appeal and appraisal, which may be able to lower the balance. It’s also possible though that even without the car, you’ll still have to pay a few more months on the loan. Don’t ignore it either, this balance can still go into collections!
Problem: “My credit wasn’t great before, but now it’s awful. How can I get another car loan?”
Solution: This is a tough one. A credit score is a measure of risk that banks take on by lending to you. By taking out a loan you couldn’t afford and demonstrating it by losing the car, you have shown the banks that you’re not necessarily their ideal borrower.  Start by trying your local credit union. As nonprofits they are often willing to work with you and may be able to arrange a loan when banks cannot.  Try to avoid the subprime used car dealers you see on TV or on the outskirts of town, the ones who say “Bad Credit? No Credit? No Problem!” and fly giant flags to get your attention… these places survive by selling cars at inflated prices and high interest rates, with the goal of forcing you to default again — profit for them because they get your payments, they get the car back, AND they get to sell the same car alll over again to someone else.
Remember, your credit can change over time, just like your health and income. No matter how bad it seems now, a financial advisor can help you find a path to recovery.

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