Repossessions are seriously damaging to your credit report. In fact, it is one of the worst negative items that can be placed on your credit and can remain for 7 years.
When a car is financed by a lender and a consumer is behind in payments, the car can be repossessed. Challenging repossession on your credit reports are a bit more complex than challenging other negative tradelines.
In most states, the lender must comply with that state’s repossession laws. If not, the lender may not be able to offset the loan deficiency of the car loan and collect from you.
Have you been sued for the deficiency (balance of the loan)
If the lender has not followed your state’s repossession laws to the letter, they can be prohibited from collecting any judgment in court or wage garnishment for that matter if a lawsuit is brought against you for the deficiency. You have rights as a consumer before, during and after repossession and it is up to you to exercise them.
Act immediately and find a consumer law attorney If you have been sued. Do not ignore the lawsuit or the lender may be able to get a default judgment because you failed to answer the lawsuit.
Even if a default judgment has been entered, an attorney may be able to get it vacated or set aside; however, do not let it come to that point in the first place and never assume you have no defenses to a lender repossessing your car.
Car repossessions have a serious negative effect on your credit report so it is up to you to make sure the laws of your state have been properly adhered to, you have recourse.
If you have not been sued for the balance of the loan
Challenge the factual errors in the listing on your credit report. The loan balance, opening date, high credit, and other errors within the listing can be disputed. As with other factual credit disputes, challenge one listing at a time with the credit reporting agencies.
Always ask for a deletion of the entire listing, not a correction. And never give the credit reporting agency the information needed to correct the error, let them do their job and investigate. Besides, you want the item deleted, not corrected. If the first item you dispute is corrected, move onto the next factual error and again ask for a deletion.
Negotiate a Settlement
If you have some money on hand, consider negotiating with the lender for a full deletion of the item. The lender knows they are likely looking at attorney’s fees and costs or a collection agency if they want to collect a deficiency on the loan. Before you make an offer try to find some leverage in getting what you want by reviewing all the charges the lender has assessed you with. Research the value of the car and make a low offer to settle the deficiency in full. It never hurts to ask.
The lender should have mailed you an accounting of all the costs in repossessing the car. Review the costs and fees such as impound, towing and storage. If you believe you have been overcharged check your state’s repossession laws. They cannot exceed the limits the law allows. Should you find a violation, this is leverage to get a deletion if you are making an offer to settle the deficiency.
If you never received an accounting or letter breaking down all the costs, you may have the basis for a lawsuit as most states require lenders to notify the debtor, within a certain time frame, of the costs after repossession has taken place.