Is It Possible to Include Your Auto Loan Deficiency in An Effective Debt Relief Program?


Many people are under a misconception that when a boat, car or any recreational vehicle is voluntarily surrendered or repossessed, the loan ceases to be valid and there are no other obligations. But that is absolutely not true. The fact is, in case of repossession of a vehicle, if the debt remains pending and you fail to pay off the debt quickly, the vehicle is put up for sale at an auction.

The sale price of the vehicle is then applied to your loan balance minus other expenses. Often, the sale price is not able to cover entirely the balance owed. If the car has been sold for an amount that is less than your loan balance, you would be required to pay whatever the difference between the amount you owe and the amount the car was ultimately sold for. For example, if you actually owed $15,000 on your vehicle and after repossession it was sold for $10,000, you would be asked by the creditor to pay up the deficiency balance amounting to $5,000 in this case.

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Would You Allow Your Car To Be Repossessed?

Many of you must be wondering if it is a good idea to allow your creditor to repossess your car. But it is always wiser to try and come up with an effective way to avoid repossession. It would certainly be better for you, if you consider selling the car yourself first. If the car’s sale price is not able to cover your full loan amount, you could consider paying off the difference by using your savings or another loan or by pulling in more income by either doing a second job or working overtime to pay off all your debt.

Car Loan Deficiency and Debt Relief

Now that you have got a fair idea about what a car loan deficiency is all about, let us explore the possibility of your car loan deficiency being put in any debt relief program. Fortunately, auto loan deficiency is treated in this respect, just in the same manner as with your mortgage deficiency. In case your car has been repossessed and thereafter, sold off by the lender, this can be put in some debt relief program. You have access to several effective debt relief options.

You could consider getting in touch with a credit counselor. You could even directly seek professional help from a debt relief company. You could opt for debt settlement as that is possibly the best option left to you, under the circumstances. Talk to your creditor directly or let the debt relief company negotiate on your behalf about settling your debt.

You could tell the creditors that you are not in a position to pay off the full amount that you owe, but offer to pay the amount you could actually pay to settle the debt. You could also, clarify that you could pay the creditor an amount that you can afford, every month.

Just keep lines of communication open between you and your creditor and do not even think of ignoring the issue. If your creditor is ready for a debt settlement, be sure to work out your debt settlement program with a reliable debt relief company in town.

Be Aware of Other Possibilities

Your creditor may not be happy about debt settlement. He may not be interested in losing any of his money. In this context, you need to be alert and you must keep checking your mails on a regular basis for any court summons.

It is quite a common practice for a creditor to consider suing you in court to make sure that he gets back the entire amount you owe. The best recourse is showing up in court when you are summoned.

You must remember to come to court with all your records including a budget and pay stubs for substantiating your efforts. Be sure to hire the services of an experienced and well-qualified attorney.

Author Bio: Stephen Hopkins is a debt relief specialist currently attached to a private debt relief agency. Offering effective debt relief options for auto loans is his forte. He suggests browsing through debt relief sites on the Internet to know more about debt relief options.