Voluntary Repossession? You Still Owe the Bank!
04 Aug 2010
As an an Orlando bankruptcy lawyer, I see this scenario quite often:
What happens if you simply can’t make that $500/month car payment any longer and decide the only decent thing for you to do is to “voluntarily” give the car back to the creditor? How bad can that be? After all, you came to the bank and did the right thing. You were not trying to hide from them, heck, they didn’t even have to pay the repo guy to come and get it! Some people refer to this as a “voluntary repossession”. There is no such thing.
Unfortunately, whether you decide to make it easy for the creditor and voluntarily drop it off at the dealership (even with a full tank of gas and freshly washed!), or whether the creditor has to hire a repo guy to track you and the car down, your financial liability is exactly the same. YOU OWE!
When you turn the car in before the terms of the financing agreement have been satisfied, you have broken your agreement with the bank and the bank can repossess the car. The bank will sell the car at an auction, and apply the money from the sale of the car to the balance you owed when you turned it in (after they’ve tacked on some junk fees, of course). Then, the collection process begins. Ultimately, you could be sued by a lawyer for the bank, a judgment could be entered against you, and your wages could be garnished to collect on that judgment.
Fortunately, the balance you owe that results from a “voluntary repossession”, or a regular old run of the mill repossession for that matter, is dischargeable in Chapter 7 or Chapter 13 bankruptcy. In other words, you will no longer owe this debt to the creditor. An Orlando bankruptcy lawyer can assist you in this process to insure the debt goes away.
So, don’t let the creditor, who you tried to do a favor for by turning in the car in the first place so they wouldn’t have to come and get it, return that favor to you by taking money from your paycheck each pay period through a wage garnishment.
Contact an Orlando bankruptcy lawyer and get help with this debt as well as other debts you may owe.