Possession Rights After Charge-Off: A charge-off is primarily an accounting action. It doesn't change the lender's rights to the collateral, in this case, the vehicle. The lender or their assignees may still have the right to repossess the car if the loan agreement allows for it and if state laws permit.
Is a charge-off better than a repossession? While you might get to keep your vehicle if your auto loan is charged off, both charge-offs and repossessions negatively affect your credit history and could impact your ability to qualify for a loan in the future.
Can a Charged Off Loan be Reinstated? Once a loan is charged off, don't count on the loan showing up on the company's books again. Even if you offer to pay it, chances are it's been transferred or sold and the original company no longer has an interest in it.
If a creditor has written off a loan, normally that means that the loan has been forgiven. In contrast, a “charged off loan” is still collectible, and consumers have legal rights under the Fair Debt Collection Practices Act (FDCPA) when dealing with a debt collector.
It depends on the repayment terms and the type of account, but the time frame is generally between 120 and 180 days after you become delinquent. Creditors will likely first send letters or call to remind you of the past-due amount before the account is transferred to a collection agency or sold to a debt buyer.
Most states or jurisdictions have statutes of limitations between three and six years for debts, but some may be longer. This may also vary depending, for instance, on the: Type of debt. State where you live.
If you used an unsecured loan to buy the vehicle, the car doesn't back the loan and cannot be repossessed by the lender. However, the lender could still sue you to recoup the losses of the unpaid loan. That could lead to eventual garnished wages or other consequences.
You can ask them—very politely—what it would take to have the charge-off removed. At the very least, they'll likely ask you to pay back a portion of what you owe. In this situation, some creditors may offer a “Pay for Delete” agreement. Bear in mind that some, but not all, creditors allow this type of agreement.
Your Options Following a Car Loan Charge-Off
Depending on the lender, they might negotiate your monthly payments, payment date, or how much you must pay to remove the bad debt. Work with the collections agency: If your auto loan has already been sent to a collections agency, you might have to work with that agency.
This means that: You are stuck with it – if the lender doesn't come to pick up the car. You can't sell it – because the lender still has the lien, and selling it would be committing a theft. You must keep it – you can't junk it or give it away either.
You may be able to remove the charge-off by disputing it or negotiating a settlement with your creditor or a debt collector; credit repair companies can help with this process. You can also steadily rebuild your credit score by paying other bills on time.
A charged-off debt typically implies that the lender has declared the debt as unlikely to be collected, but it doesn't absolve you of ownership responsibilities. To secure a new title, you'll likely need to work with the lender who charged off the debt.
With a charge-off, your creditor essentially gives up trying to collect and writes the amount off as an unpaid balance. However, you're still responsible for repaying, the debt and your creditor may sell the charge-off to a collection agency.
If you're unable to clear your outstanding balance on your Santander credit card, you may want to consider negotiating a debt settlement. Debt settlement involves negotiating debt with your creditor to forgive part of the debt and accept a settlement amount.
If your lender can't locate your vehicle to do a "self-help" repossession, they can still sue you for the vehicle. This will involve a small claims case, where the judge will order you to give the car to the lender. You might even be compelled to Court to provide testimony about the location of the vehicle.
Creditors Can't Repossess Property Not Specifically Named as Collateral. If something isn't specifically named as collateral for a debt, it can't be repossessed.
Another option is to give up the vehicle to the lender voluntarily rather than going through the repossession process. The lender may find this option appealing because it avoids the costs of repossession, and it may agree to reduce or eliminate the deficiency balance on the loan.
2) What is the 609 loophole? The “609 loophole” is a misconception. Section 609 of the Fair Credit Reporting Act (FCRA) allows consumers to request their credit file information. It does not guarantee the removal of negative items but requires credit bureaus to verify the accuracy of disputed information.
A charge-off typically stays on your credit report for up to seven years, and it can have a significant negative impact on your credit score. If a charge-off is inaccurate, it's usually a smart move to work on having it removed from your credit history.
You can write a goodwill letter to the creditor asking them to remove the charge-off from your credit report. Explain your situation and why they should make an exception for you.
For starters, once a debt is charged off and reported to the credit bureaus, the damage to your credit score is already done. Paying the charged-off account won't remove the charge-off from your credit report, and it typically won't significantly improve your credit score in the short term.
Debt collectors are not permitted to try to publicly shame you into paying money that you may or may not owe. In fact, they're not even allowed to contact you by postcard. They cannot publish the names of people who owe money. They can't even discuss the matter with anyone other than you, your spouse, or your attorney.
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.