Can Repossessions Be Removed?

It can be financially devastating to have a vehicle or other item repossessed, not to mention embarrassing! The repercussion of repossessed items can mean different things to different people. Repossession of a vehicle usually means loss of freedom to the owner. Repossession (foreclosure) of a home can mean the loss of family memories. Beyond these emotions, a repossession will trigger the downward spiral of your credit score!

As you watch your car being towed away, you might feel as though your world has come crashing down! However, as bad as it may seem, it’s not the end of the world! Really! The best thing to help yourself is to immediately begin to rebuild your credit. To do this you should first request copies of your credit reports from the three major credit reporting agencies. These three credit reporting agencies are Experian, TransUnion, and Equifax. Once every twelve months, these credit reporting agences are legally bound to provide you with a copy of your credit report, upon your request.

Once you receive your credit reports, you should sit down with them and review them thoroughly. When repossessions are entered on your credit report, the entry will include a list of all fees associated with the repossession, such as towing and storage. Check these amounts against your receipts. These amounts must be listed accurately. If they are not listed accurately, you may be able to dispute the item as a negative entry.

If you find any discrepancies on one or more of your credit reports, you should write a dispute letter to the relevant credit reporting bureaus explaining the errors and requesting removal of the repossession entry. You should include a copy of your credit report with the errors highlighted as well as the receipts which correspond with the errors on the credit report. Also, be sure to retain copies of all letters you send.

Once the credit reporting agency has received your dispute letter, it has 30 days to contact and verify the repossession with your creditor. If the creditor cannot or does not verify the repossession amounts within the alloted time frame, the credit reporting agency is legally required to remove the entry from your credit report. You should receive a letter from the credit reporting agencies which indicates what action was or was not taken with regard to your account and why. If you are unsuccessful in removing the repossession entry, it will continue to be listed on your credit report for seven years.

If disputing the repossession entry with the credit reporting agencies does not work, you might try contacting your creditor to negotiate the removal or improvement of the repossession entry. To do this, you would want to call or write your creditor and request removal of the repossession entry in exchange for partial payment or payment in full. If an agreement is reached, be sure to obtain the agreement in writing along with both of your signatures.

Although repossession can be devastating, it is something you can recover from. Times are tough and you are not alone in this plight. Just remember that there are better days ahead!

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Repossession 101

If you make a major purchase, like purchasing a vehicle, you will likely be required to sign a contract. It is typical that this contract will include a clause which addresses repossession. The ability of a company to repossess your secured property will hinge on this contract and your state’s applicable law.

When people talk about repossession, they normally do so in the context of auto repossession. However, repossession can occur with items other than just a vehicle. Repossession can occur with any secured item. What does this mean? Well, when you use an item as collateral, or security, toward the payment of a loan, the loan is then classified as a secured loan. Whenever there is a secured loan and the debtor defaults on his payments (even one missed payment may be enough to get the process rolling), the item can be repossessed.

Items which can be repossessed include, but are not limited to, your home (this process is usually referred to as foreclosure), vehicles, rent-to-own items, and any collateralized item. On the flip side, items which cannot be repossessed include, but are not limited to, credit card purchases, property which has not been collateralized, and secured property which is the subject of an unenforceable contract.

In addition, it is important to note that in many states a repossession can take place without your knowledge and can happen at any time or place. With regard to vehicles, in some states, creditors are legally permitted on your property to seize your vehicle. They do not have to obtain your prior consent! In other words, your creditor may not have to give you notice that the repossession will be taking place. You may walk out one morning and find that you will be walking to work that day!

In the majority of states, it is unlawful for a creditor to “breach the peace.” Put simply, this means that neither violence nor threatening tactics may be utilized by a creditor when attempting to repossess your vehicle. To take this a step further, creditors are normally not allowed to enter your closed garage in order to repossess your automobile.

If your creditor repossesses your property, he will likely sell the property. He can legally do so at either a public or private sale. He must sell the property in a “commercially reasonable manner.” You may have resigned yourself to this and think that the matter is now over. You will need to reconsider that thought! If, at the sale, your property sells for less than the amount remaining on the loan, you may well be responsible for the amount remaining, or the deficiency. For example, let’s say that you purchased a car for $5,000 and, when it was repossessed, you still owed $2,000 on the loan. Your creditor sold it at a public auction for $1,5000. This means that there is a $500 deficiency between the sale of the car and what was still owing on the loan. You may be responsible for the remaining $500. In addition to the deficiency, you may be responsbile also for the creditor’s repossession fees, such as storage, towing, etc.

Creditors sometimes request “voluntary repossessions.” When you voluntarily hand over an item to one of your creditors, it is called a “voluntary repossession.” You should not have to pay repossession fees with a voluntary repossession and this is the only real benefit that I see to a voluntary repossession. Even if you agree to a voluntary repossession, you will still be responsible for any deficiency following the sale of the item and your credit report will still contain a repossession entry. It would be smart to negotiate with your creditor that he will not report the repossession to the credit reporting agencies if you agree to a voluntary repossession. You should obtain this promise in writing!

Your creditor is normally responsible for any of your personal property which was inside the repossessed item at the time of repossession. Creditors are usually required by state law to use reasonable care to safeguard your personal possessions from theft or damage.

No matter what your situation may be, it is always better (and normally less expensive) to try to negotiate with your creditor to settle the matter. If you don’t let the process get too far out-of-hand, creditors are usually open to negotiating a new payment schedule or possibly settling for a lesser amount if you have a lump sum payment you can offer.

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Are Judgments Really As Bad As People Say?

I hope you are not looking at a judgment and are just asking this question for the sake of curiosity. However, if you believe you will be facing a legal judgment, it is essential that you do your research and understand the mechanics of a judgment – before it happens, during the process, and afterward.

When a creditor feels he will be unable to collect a debt from you or if he just get tired to trying, a judgment proceeding may be initiated by the creditor against you. However, before getting to this point, many things have normally taken place. For starters, you likely agreed to pay the creditor for an item you purchased on credit, meaning you agreed to pay for the item in installments. Another scenario would be where you obtain a credit card and charge an item to the credit card, thereby creating a balance owed to the credit card company.

Excited about your purchase, you drive home anticipating the benefits and enjoyment you will receive from the purchase. Unfortunately, the economy is so poor that two weeks later not one, but both, of your grown children and their families move home because they cannot make ends meet. Your kids are confident that they will be able to recovery financially within two or three months; however, eight months later they are all still there and you are financially over-extended. You have been unable to make a payment on your purchase for the past four months and your creditor is now sending letters and calling constantly.

Normally, a creditor will contact you when you fall behind on payments and try to determine the cause and make arrangements with you to bring the payments current. The economy is so poor right now that he may initially be sympathetic and understanding. As time continues, however, he may become less inclined to sympathy and more insistent upon cold, hard cash. As it takes time and money to try to chase down debt owed, your creditor may become even less sympathetic and file a judgment proceeding against you in order to attempt to obtain payment. (It is important to note at this point that when you entered the agreement to purchase the item or when you entered the agreement with the credit card company to pay for any debt you incurred using the credit card, you probably signed a written agreement which contained a clause allowing the creditor or credit card company to initiate a legal action against you in the event that you defaulted on your payments.) By initiating this legal action, your creditor will attempt to prove that the debt was incurred by you and that you do, in fact, owe the sum due. By doing this, he will be able to obtain a “judgment” against you.

People unfamiliar with legal matters are often nervous when they receive legal papers, which is natural. They may even consider not appearing in court for the hearing because they are scared to do so. Let me state here and now that it is ESSENTIAL that you show up at the hearing! If you do not, your absence will mean that a default will automatically be rendered in the case. A default on your part means that you LOSE the case and your creditor, with no effort on his part, will automatically win! This will mean that you will be right back at step one again and owing your creditor the debt.

In the event your creditor is successful in this matter, he will be granted the judgment. Following this proceeding, you will be served with a Notice of Judgment, which will give you up to 30 days to pay the debt in full. Your creditor will have access to certain legal actions in the event you do not pay the debt within the 30-day time limit. These legal actions can be quite severe and can include liens against real property, garnishment of wages, and seizure of assets.

Your credit score will take a nose-dive if your creditor is successful in obtaining a judgment against you! It is best to contact your creditor early on and try to work out a payment plan. Remember, the only one hurt in a judgment proceeding is YOU!

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Can I Have a Judgment Deleted?

If you have lost a legal suit involving a debt by not showing up or, if you did show up, but the judge ruled against you, maybe the judgment can be vacated. You would need to file a Motion to Vacate to begin the process.

When you file a Motion to Vacate, you are in essence suspending the judgment and requesting a new hearing. If the Motion is granted, you will need to be prepared to argue for dismissing the case.

So What Steps Do I Need to Take?

Depending upon state law, the steps below will yield results if followed carefully:

1. It is important that you research and master your state’s court procedural laws. When you do this, you will learn the proper way to draft a motion and for what reasons a judgment may be dismissed. It is imperative that you have a grasp of the court’s rules. By performing this research you will discover the reasons a case may be thrown out on a technicality.

2. Take your completed Motion to Vacate to the originating court’s court clerk and file it. Ask if there are any other documents which need to be filed. You will need to pay a filing fee when you file the motion and you should request certified copies. Mail the original to the plaintiff, who is most likely your creditor or the collection agency which initially filed the suit. Be sure that you mail the motion by certified mail, return receipt requested.

3. You will need to mark your calendar with the date and time of the hearing. The court clerk will schedule the hearing and likely mail the notice to you so make sure the court clerk has your correct address.

Thirty-five days are given to the plaintiff to respond to the motion. In some cases, the plaintiff may attempt to settle out of court or possibly not even appear at the hearing. You will win by default if the plaintiff does not appear in court!

You should demand that the creditor file dismissal paperwork and require that the judgment be withdrawn by the credit reporting agencies if your creditor wants to settle out of court. Be sure to commit your agreement to writing in the form of a legal agreement.

It is important to understand that a “paid” judgment is almost as damaging as an unpaid judgment. Make sure that your judgment is removed in its entirety rather than revised to “paid” status.

You will need to be prepared to prove the creditor wrong if the case does go to court. The creditor, being the plaintiff, is responsible for proving its claims.

Some thoughts to keep in mind include:

1. For beginners, you might attempt attacking the creditor’s documentation. In this regard, you might require that the creditor produce the original contract or a copy thereof. If the creditor can provide a copy of the contract, fine; if not, it will throw doubt on the creditor’s case.

2. It is imperative that you review your state’s statute of limitations law to determine if the debt is outside of the statute of limitations. You have no legal obligation to pay this debt if it is, indeed, outside of the statute of limitations. If this is the case, the matter will be dismissed.

3. If it appears that a judgment is in your future, think about employing a consumer credit attorney for advice. Consumer credit attorneys make their living handling cases just like yours and will be able to guide you through the process and offer valuable advice.

Judgments are destructive and will cause you financial woe for years to come. You should do everything in your power to avoid a judgment!

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What Can I Do About a Judgment?

The last resort for a creditor to obtain payment from a debtor is to try to obtain a court judgment. You actually agree to this when you take out a loan or apply for a credit card. The fine print in the document states that you agree to be sued if you don’t make your payments each month.

The main goal in a creditor’s law suit is to prove that you actually owe the debt. It is smart, if you really do owe the debt, to attempt to resolve any pending legal action quickly. It is often that a creditor may prefer a settlement to continuing with a legal action. To show good faith, it is helpful if you can provide an up-front partial cash payment.

It is important to ascertain if the statute of limitations has already run. If so, the debt is uncollectible. You should note though that your legal obligation to pay the debt can be reinstated if you make even a small payment.

If an attorney is handling the matter for the creditor, call the attorney and make an offer. No matter how modest your offer may be, the attorney is ethically bound to discuss the offer with the creditor.

You should do what you can to avoid going to court. Also, keep in mind that a settlement is always better than a court judgment. If your creditor is able to obtain a judgment, your credit report will reflect the judgment and the entry can remain on your credit report for up to ten years.

It is important to SHOW UP if you cannot reach a settlement with your creditor and you end up in court. Some people make the mistake of not showing up which means that they automatically forfeit. This means that the creditor wins by default!

It is important to note that if you do appear, you should be prepared to present a defense and work toward a resolution of the matter. You will earn the respect of the judge and plaintiff creditor by doing so. This will require that you present a defense on your behalf.

You will receive a notice of judgment if the creditor is successful in his suit. The judgment will allow you 30 days in which to pay the debt in full. After the 30 days has run and if you still have not paid the debt, there are additional legal actions which the creditor may take. For instance, the creditor may be allowed to place a lien against your home or property. If a lien is placed against your home, the lien will have to be paid in full prior to the sale or refinance of your home.

In addition, a creditor may be able to seize personal property you own. One other possible legal remedy might be garnishment of wages.

A judgment obtained by a creditor will be noted on your credit report and will cause financial havoc. Other areas of your life may be affected by a court judgment as well. In some instances, a court judgment can affect whether you get that new job or if your bid for advancement in your current position is granted! You should do your best to avoid a court judgment.

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What Will Happen If I Have a Charge-Off On My Credit Report?

It is often difficult to remove a charge-off from a credit report. However, it can be done. If you want to learn more about charge-offs and the repercussions of these credit reporting entries, read on.

Let’s talk a bit about what a charge-off is and what happens if you let it go with attempting to correct it. When a creditor feels it will not be able to collect a debt from a borrower, it will very often write the debt off of its books. This normally takes place after many months of late or missed payments. The creditor will likely attempt to communicate with you through letters or phone calls during this time.

It would be wise to contact the creditor at this point and try to work out a solution so the account will not be sent to collections. You should never ignore when the creditor is attempting to contact you because this will look as though you are trying to avoid the debt entirely. If you work with the creditor, you may be able to reach a compromise or arrange for a payment plan to get yourself back on track.

It is important to understand that once your debt is written-off, your creditor may decide to pass or sell the debt to a collection agency. The collection agency will then attempt to collect the debt using any method of harassment and threat available to it, including the filing of a law suit to collect the debt.

Once reported to the credit reporting agencies, your charge-off can remain on your credit report for up to seven years. As you can imagine, your credit score will decrease substantially with a charge-off entry and your ability to obtain credit from any lender will be difficult to say the least. For this reason, you should try to remove charge-offs from your credit report.

A copy of your credit report will be needed to begin the process of removing a charge-off. When you have a copy of your credit report in hand, review it for any false or inaccurate information. If you discover any false or inaccurate information, you can write the credit reporting agency and request that it remove or revise the information. You will need to include copies of any documentation you have which corroborates your claim. If the credit reporting agency cannot verify the informaiton within 30 days, it must remove the entry from your credit report in its entirety.

Additionally, another option you have is to contact the collection agency and explain that you would like to arrange payment. Debt is normally purchased by collection agencies for cents on the dollar. Because of this, you might want to try to arrange a lump sum payment if you can come up with the money. By doing this, you may be able to negotiate a lower total amount owed. Alternately, you can attempt to arrange a payment plan. Whichever path you decide to take to pay back the debt, be sure to obtain an agreement in writing which states that the charge-off credit entry will be removed in its entirety from your credit report or that the offending entry will be revised to “paid” status.

In conclusion, if you are falling behind on your monthly payments, try to work out a payment plan with your creditor in order to avoid a charge-off. If a collection agency does end up with the debt, try to negotiate removal of the charge-off once the account is paid in full.

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