Legal Question in Credit and Debt Law in Pennsylvania

Re: Voluntary Reposessions

You asked about voluntarily repossession of a vehicle.

When a vehicle is worth less than the amount owed on the loan this is called an upside down loan. If a vehicle is repossessed in such a situation then there will definitely be what is called a deficiency (which equals the difference between what is owed on the date of repossession and the realized value of the vehicle). The vehicle will be sold at auction to get to a "fair market value" of the vehicle. Not only does the debtor get hit with the actual deficiency but will often get hit with additional fees that become part of the deficiency (such as vehicle reconditioning, administrative fees, repo fees and sales fees). This amount remains as a debt and if it is more than a deminimus amount then the creditor will sue and will get a judgment for the amount due.

Repossession is not a satisfactory resolution in any but a very few cases. You would be much better off to seek a personal sail of the vehicle and then pay off the loan. Even if that means you have to come up with some money to do so.

Will a repo affect your credit worthiness? Yes. Sometimes it will affect it greatly and other times very little.

You need to evaluate your situation with an attorney or a very good CPA. Bankruptcy may be a viable option and may provide valuable refuge for you.

Regards,

Roger