Are You Haunted by a Repossession on Your Credit Report?

Just when you think you’re getting your finances in order and want to apply for a new line of credit, a vehicle repossession from long ago can come back to bite you. What happens after your vehicle is repossessed, and how does it affect your credit report and credit score moving forward?

What happens after the sale of your car?

1) Collection

Once the lender sells a repossessed vehicle, you’ll receive a letter that includes the vehicle’s sale price and any remaining balance owed on the loan. This letter is called a deficiency notice.

The lender may proceed with collection of the deficient balance through their collection department. However, the lender will often assign the collection of any deficient balance to a debt collector, and the borrower will begin to receive calls and/or letters from them.

Whether you owe the deficient balance or not, collectors must follow the Fair Debt Collection Practices Act when they contact you about debt. Borrowers have rights, whether the balance is owed or not.

2) Lawsuit

After a period of time, the lender may choose to file a lawsuit against the borrower for the deficient balance. If the lawsuit is ignored by the consumer, a default judgment will be entered against the consumer.

Judgments can be dangerous! Bank accounts can be attached. Wages can be garnished. Property can be seized. Judgments can be listed on the consumer’s credit reports and impact the ability to be approved for new credit.

If you have been sued, contact a qualified consumer protection attorney to discuss your rights.

3) Credit Reporting

Vehicle repossessions negatively affect your credit report and lower your credit score. They can remain on your report for seven and a half years after the original delinquency date. The negative reporting could impact existing accounts by increasing interest rates or decreasing credit limits. The repossession could also affect your ability to be approved for new credit, whether you’re applying for a new credit card, car loan, or mortgage.

Negative credit information may also impact your ability to be promoted or hired for a new job or get approved as a tenant for an apartment. The Fair Credit Reporting Act offers consumer protection for the accuracy, fairness, and privacy of reported information. You can get a FREE credit report every twelve months from Transunion, Experian, and Equifax.

Steps to take

If you are haunted by negative reporting from a vehicle repossession, take the following steps:

  • Gather your car loan and repossession documents
  • Gather all correspondence that the lender sent AFTER the repossession
  • Gather all collection letters received for collection of a deficient balance
  • Obtain current credit reports from Transunion, Experian, and Equifax
  • Gather supporting documents such as:
    • Loan Denial Letters
    • Account statements showing interest rate increases
    • Account correspondence stating credit limit reduction

Seek Legal Advice

Flitter Milz is a consumer protection law firm that pursues matters against the credit bureaus for inaccurately reporting information.  Contact Us for a FREE case review.  We will evaluate whether your rights have been violated by the lender, debt collector or credit bureau.