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If you are currently financing or leasing a vehicle, you are most likely aware that your creditor has certain rights regarding your vehicle, such as repossessing your car without warning or going to court if you fail to make regular payments on the car. Apart from repossession, the creditor can also sell your contract to a third party who can then seize your car.Should you find yourself in a situation where your car is repossessed, you will need to pay your past-due balance within a short period of time to be able to reclaim your car. Should you fail to pay, lenders may sell your car at an auction at a price much less than the amount you owe for the car.
After selling your car, the creditor or lender should send you a written notification stating the amount the car has sold for and the amount you still owe. You should note that the payment for the auction will need to cover repossession along with legal and auction fees before it can go towards paying your balance, so deduct the incurred fees from your total balance.
Here are some tips you may use in case you find your car being repossessed by the creditor:
If you have no other means to pay for the debt requirements for your car, you may file for a type of bankruptcy to stop the lender from collecting payments and to wipe your car-loan balance clean because the lender will declare it as a loss. With this course of action, you should close all your credit cards as well as all your other loans. However, you may keep your current house and other car payment loans. You can also file for another type of bankruptcy where all your credit cards will be closed, with you making monthly payments to the court to cover your outstanding debt, and the court providing the money to your creditors including your car loans and car balance but excluding your house loan.
To avoid being taken to court by your creditor/ lender, you can apply for a loan at a bank. You may ask your family and loved ones to help in case the bank will grant your application for a loan. In applying for a loan, ensure that you will not miss on the payments, and that the amount you are paying for is manageable for you. This way, you will not incur more debt and further financial problems. You can use a credit card with a high limit for paying off the remaining balance on your car loan, but only if you have no other option and you are all right with the idea of paying for bills with high interest rates.
If you own a repossessed car and you cannot get a new loan or do not feel like filing for bankruptcy, your creditors/ lenders are likely going to sue you for not paying for the outstanding balance. After a court judgment has been sought against you by your creditor, they will now have the right to garnish your wages. How much you will be charged for garnishment will depend on how much your income is and how much you owe. The garnished amount will be taken from your salary every month. Compared to other options, this alternative is more reasonable than high car payment as it enables you to keep your credit cards and other loans.
To know more about repossession rules in your town, you may call your local community or contact a credit counseling group, which are usually non-profit organizations, to assist you in finding the right and ideal solution to your financial problems.
This Post Contributed by Jep Barroga, a blogger & an editorial specialist at MoneyHero, Hong Kong’s premier comparison website for credit card and insurance providers.