What Voluntary Repossession Means for Auto Lenders

 Posted on May 28, 2019 in Auto Lenders

Repossession is often the last resort for auto lenders when dealing with debtors who are behind on their loan payments. You are more likely to retrieve full value on the loan if the debtor continues to make payments than if you repossess the vehicle and resell it. There is also the hassle of notifying the debtor of your intention to repossess and hiring someone to tow the vehicle for you. However, the process can be simpler if the debtor voluntarily turns the vehicle over for repossession. In most cases, the debtor will be the one to suggest voluntary repossession.

How It Works

The result of voluntary repossession is the same as involuntary repossession. You will regain possession of the vehicle and sell it to recuperate the money owed on the loan. The debtor will be liable for any deficiency between what you receive in the sale and what remains from the loan. The difference is that the debtor agrees to surrender the vehicle and will deliver it to you at a time and place of your choosing. The debtor’s compliance means that you will not be fighting over whether you have the right to repossess the vehicle or using a towing service to retrieve the vehicle.

Why Voluntary Repossession?

The debtor still has much to lose by surrendering the vehicle to you. They are losing possession of the vehicle and defaulting on the loan, which will hurt their credit. However, they may prefer voluntary repossession if they believe repossession will be unavoidable:

• They have more control over the repossession process rather than worrying about when you might take the vehicle;
• They can save money because they will immediately stop making payments after surrendering the vehicle; and
• Voluntary repossession looks better in their credit history than involuntary repossession because they are being proactive and cooperating with you.

Contact a Chicago Creditor’s Rights Attorney

You cannot force a debtor to continue making loan payments if they choose to surrender the vehicle to you. However, you can discuss their options for modifying the loan to make payments more manageable. Through loan modification, they can benefit by being able to keep the vehicle, and you may gain more money than if you repossessed the vehicle. A Chicago debt collection lawyer at Dimand Walinski Law Offices, P.C., can advise you on your options when dealing with a debtor who is struggling to pay back their loan. Schedule a consultation by calling 312-704-0771.

Source:

http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=3384&ChapterID=24