Legal Question in Credit and Debt Law in Pennsylvania

Re: Can't afford car pymts and can't afford to sell it

You asked about surrendering your car to improve your financial position.

My first suggestion is to get financial counseling from a legitimate non-profit financial counselor. I can help you with finances and budgeting, but I am not non-profit. Also, it sounds like you may have a good handle on the issue already.

Surrending a vehicle is a decent option, but usually not the best option. A surrendered vehicle is still considered a repossession. But a voluntary repo is better than an involuntary repo.

When a vehicle is repossessed in any manner then the finance company must recover its costs and expenses. This will include any administrative fees in addition to any deficiency on the vehicle. The vehicle will be sold at auction and the auction price will be credited to the balance due on the account. It the car is sold for less than the total amount due then the sale leaves a deficiency sale and the amount of the deficiency is still owed by the debtor (you). Because auctions tend to fetch a lower price than outright sales surrendering the vehicle for auction is less favorable than a private sale.

So if there is anyway that you can arrange a private sale then you will be better off than surrendering the vehicle. Even if you sell the vehicle for less than you owe and then pay the deficiency yourself this will be better than a voluntary repo.

Yes, a voluntary repo will show up on your credit. As long as your other payments are up to date and you make good on any deficiency then your credit should not suffer significantly. After a short period of time your credit score should be back to normal, expecially considering you have improved your financial condition by removing the vehicle debt.

Regards,

Roger Traversa

email: [email protected]

phone: 215.279.8940