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Collections Law/Voluntary Auto Repo
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Question
How do I voluntary repossess my car without it effecting my credit. I have heard you can negotiate the payoff through a form 1040 schedule Q so the bank can right off the full amount of the debt and the debter pays the tax on the amount owed on the remaining balance.
Is this true?
The only possibility I see is to negotiate a "settlement in full" with the finance company and sell the car. Put your proposal in writing and ask that they either show the account with a 0 balance or remove the item from your credit.
A voluntary repo is no different from an involuntary repo. They are one in the same and are treated as such. The vehicle will be sold to the highest bidder, usually for about 50 cents on the dollar, sometimes less, then they demand you pay the deficiency balance, including repo or collection fees.
If any part of the debt is forgiven they will send you a 1099 at the beginning of the year. You will have to report this as income and pay taxes on the charged off amount or amount forgiven.
You are not in a good position to save your credit unless you can sell the car and/or negotiate the settlement. I have had some successes negotiating settlements on car loans so I know it is possible. Let me know if I can help.
Good luck.
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Answers by Expert:
Michael Brotherton
Expertise
Consumer/Debtor Rights Advocate. Mike Brotherton is a negotiator with over 30 years experience in consumer lending and collections. Mike has 30 years in the credit and collections industry as a former loan officer, debt collector and manager of two finance companies over several years. Mike is well versed in Loss Mitigation practices and the legal collection process. He has helped literally thousands of people over many years overcome serious financial problems such as foreclosure, creditor lawsuits and abuse by debt collectors. For more information about resolving your "financial emergency" visit www.financialemergency.com. FinancialEmergency.com is a consumer web site which actively promotes Fair Debt Collection Practices and other consumer protection laws. We teach DEBTOR RIGHTS and enforcement of those rights. The more informed you are of your rights and the credit collections practices of creditors the more peace you can have dealing with your FINANCIAL EMERGENCY. Most financial problems are fairly common and as such have some very common solutions. The key is understanding your rights in the collection process and how to enforce them if need be. Primary business- Debtor Rights Advocacy and Debt Mitigation relating to foreclosure, creditor lawsuits, and other serious financial problems. www.financialemergency.com (copy and paste in browser).
Experience
Over 40 years combined experience negotiating disputes and resolving financial issues related to consumer debt, corporate issues and mortgage modifications.
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