Yes, you will still be responsible for the loan or debt on your vehicle even if you voluntarily turn it in. If you have a vehicle that you cannot make payments on, you have the choice of voluntarily surrendering the car or you can let the creditor repossess it. What many people do not know is voluntarily surrendering the vehicle is still considered a reposession on your credit report, a voluntary reposession.
When you voluntarily surrender a vehicle, you take the vehicle back to the lender on your own terms. You can usually contact the lender and they will work with you on a time to turn the vehicle back in.
If the vehicle is non-voluntarily or involuntarily repossessed, they will come and get the vehicle on their terms. The lender may not care when this is and it could even occur at night or at a time when you are not around. There are also fees associated with a repossession that you can avoid if you voluntarily surrender the vehicle.
Although voluntarily turning a vehicle in sounds like a better option, it’s important to know the consequences of a voluntary reposession. When you surrender a vehicle, it will be sold again. The lender will then send you a bill for what is called a deficiency balance. This is the difference between the amount you owed on the vehicle and what they were able to sell the vehicle for. So say if you owed $14,000 and they sold the vehicle for $8,000, you would still be responsible for the difference of $6,000. This is the same thing that would occur if the lender had involuntarily repossessed your vehicle.
So in the long run, you will be responsible for part of the loan if you voluntarily surrender your vehicle. Depending on how much you owe on the vehicle and how much the lender resells the vehicle for will determine the deficiency balance. You will be responsible for the deficiency balance and the voluntary reposession will still show up on your credit report.
If you file for bankruptcy then you may be able to avoid the repossession appearing on your credit report (if you file before the repossession) and you can wipe out the deficiency balance on the vehicle.
I still have another vehicle financed with the same instition in which I want yo volunteer surrending a vehicle in which my daughter abandoned when she no longet wanted to pay for it, I financed the car in my name for her because she had no credit & wanted her to have a reliable car but had no ideal she would do this to me, I tried to keep the car but I can no longer pay for two cars. I am financially burden & can’t do this any longer so I have to surrender her car back!! PLEASE I need advice! !
Catherine,
You are in really difficult position (I know I’m not telling you anything you don’t already know) and I would talk to an attorney. If you voluntary turn in the vehicle they are going to come after you for the deficiency balance. Depending on the terms of the financing, they may have cross collateralized the loan you had on one vehicle to your other primary vehicle. Depending on how much the deficiency balance will end up being and whether you have other debts it may make sense to explore bankruptcy as an option. Contact an attorney, though, they can help walk you through the process. I’m sorry you are having to deal with this!
My car was broke and one day while I was out of town, my husband of only 3 months decided to call the finance company to voluntarily surrender the car to them. He’s is not a signer on the car but they came and got it anyway. When I was told what happened I contacted the finance company and they told me the car was auctioned and that I would need to come in to the office to sign the papers for the balance. Since I didn’t sign the papers allowing them to sell the car, am still responsible for the balance?
Tammy,
If you weren’t past due at the time of them picking up the vehicle then I think you have an argument that they could not have taken the vehicle legally. However, if you were even a day late then I think they have the right to pick up the vehicle even though you weren’t the one to give them permission to do so. Good luck!
I am retiring and leaving the country
I can’t sell my car for what I owe and so I am planning voluntary surrender or just let it be repossessed
What do you advise
Maisie,
I would see this response I gave to Chas. It’s a very similar question you had. https://www.duncanlawonline.com/if-i-choose-to-voluntarily-turn-in-my-car-what-should-i-do/
My husband refinanced two years ago his car with a credit union. Just now we noticed that the credit union is not reporting the loan to the credit bureaus. We got that car in order to rebuild my husbands credit union and now we do t know what to do. Was thinking on letting it go since it won’t affect the credit but the what would happen with the deficiency. We owe19k and it won’t sale for that amount. And the bank never told us they won’t report to the credit bureaus otherwise we wouldn’t have refinanced with them.
Gisela,
If you let the vehicle go they can come after you guys for the deficiency balance. They also could negatively reflect that on his credit. If you have been making payments on time then request a payment history from the creditor and send that in to the credit bureaus requesting that they correctly show that payments have been made on the vehicle. That should help build his credit if timely payments have been made. Good luck!
My husband and I voluntarily surrendered our RV when we entered Chapter 13 bankruptcy several years ago. We were never behind in our payments, but thought this was the right thing to do. Under the Chapter 13 agreement we are still paying the full balance of the loan. We thought the balance would be reduced since we surrendered the property with the good faith understanding that the creditor would sell the property. Since we are paying the full amount can we expect the property to be returned to us once it is paid off or have we been defrauded?
Nancy,
If you have an attorney for your Chapter 13 bankruptcy you should contact them about this. Typically, you shouldn’t pay the full amount of the original loan because they should sell the property and only go after you for the deficiency balance. If they haven’t sold the house then I would consider objecting to their proof of claim. The creditor is under an obligation to mitigate their loss.
I purchased a 2007 Honda Accord 4 years ago, the purchase price was 14k and 4 years later I still owe 17k. I have missed a few payments, but always made arrangements and took care of it with the company and remained in good standing but the balance never goes down. I feel that my loan is predatory and to my calculation I have already paid upward of 20k for this car. I still have 2 years left and I still owe the full balance. I was recently told by the CS agent that I could still have a balance after my maturity date due to my late payments. I feel that at this point a voluntary repossession is my best option. I just can’t keep paying $460 a month for a vehicle that continues to age but the loan never decreases. Do you have any better options? Other dealership won’t trade it out without a 10k down payment… and I’d be back in the same situation anyway upside down……I’m at my wits end here!
Tameka,
You are certainly in a tough spot. It’s tough to say for sure without knowing the full extent of your financial situation what your best bet is. If you owe other debts (credit cards, medical bills, personal loans, etc.) then it may certainly be worth looking into a bankruptcy. One thing you could do a in a Chapter 13 bankruptcy is do what is called a “cramdown.” This would allow you to pay back what the vehicle is worth, not what you still owe on it.
Can you voluntery surrender your motorcycle to harley davidson if you have a medical disability and can no longer make your payments without it affecting your credit score?
You can certainly surrender your vehicle but they will show a negative mark on your credit report. I’ve never heard of a medical issue being a reason they wouldn’t still negatively reflect the voluntary surrender on your credit report.
My car got impounded and I was told that the dealer would be able to take the car out for me and I would just pay them back in payments. Now they are telling me that they are not able to give the car back because of the reasons it was impounded unless I get it through another finance company. my credit is not so good so I’m afraid that won’t work cuz I still owe a lot for the car so they said that if I’m not able to do that the car would go under voluntary repo. Which is not what I want cuz I’ve made every payment on time and I was going to pay them back for the fees of the impoundment. I don’t know what to do. And need some advice.
Gabriela,
It’s tough to give you any kind of good feedback without more information. Based on what you’ve said, I would try to negotiate more with your regular finance company. They would certainly rather have your money than the vehicle.
I just did a volunary repossession of my car. Only because It needed $2000 worth of work to pass inspection. I would hate to see them fix it all and re sell the car. It is a 2001 Ford Explorer. needed new exhaust, missing body mounts, frame is rusting. Is there any way I can get out of paying it back??
Lori,
The creditor has the right to go after you for the deficiency balance. Not a lot can really be done to avoid that.
My mother turned in a vehicle over 10 years ago. She is almost 70 now and someone called her today about this loan. She doesn’t understand and now she’s all upset, etc. She said she never heard anything after she gave them the vehicle so why are they calling now. Is this legal to contact someone 10 years after they voluntarily reposed a vehicle?
If they never sued her and she never made a payment then they likely cannot come after her. However, if they did sue her then they could possibly still come after her. I would find out if she had been sued and I would then ask the creditor to show that the statute of limitations has not lapsed on the debt. Good luck!
I am worried about what Ford motor credit can legally do for a balance after our truck is sold at auction? Can they garnish our bank account or put a lien on our home? Our truck is like new and I hate to voluntarily take it back but, $810 a month is killing us.
Malissa,
It depends which state you are in. For example, they cannot garnish wages in North Carolina. However, when they have the deficiency balance they can sue you and then place liens against different pieces of property after they have sued you.
I am considering voluntary repo and filing bankruptcy, which should I do first?
Asia,
If you know you are going to file the bankruptcy then it is almost always better to do it first. Otherwise, you’ll have both a repossession and a bankruptcy on your credit instead of just the bankruptcy. Good luck!
My fiance was In a car accident, which was not his fault. His car was “fixed” then after we get it back the transmission goes out on it. We don’t have a mechanic telling us the accident it was in was the reason for this, but am almost certain. Anyways, it’s sitting. &we don’t have the finances to get it fixed. We are considering forfeiting it back to the bank then be responsible for deficiency balance. I don’t now if this is your expertise but what would you do in this situation? We aren’t sure if there is another route we could take or if we should get a lawyer. We already have an injury lawyer for his injuries in the accident but she isn’t too helpful on what we should do with his car. Thanks in advance!
I would take it to another mechanic and see if they can more specifically diagnose the problem. If you can show it’s from the accident then insurance should cover it. If you can’t do that then there aren’t any great options. You can surrender it back to the finance company but, as it appears you are aware, they will come after you for the deficiency balance. A bankruptcy would wipe all of that out.
I RECENTLY LOST MY JOB AND HAD TO ACCEPT A LESS PAYING JOB, MY HUSBAND GOT INJURED AND NOW HE IS ON DISABILITY. SO TO SAY I AM IN A RUT WITH ALL THE BILLS, CREDIT CARD DEBT AND PAYING A $530 CARE PAYMENT I CANNOT DO IT. I HAVE TRIED EVERYTHING , REFINANCE, PERSONAL LOAN, AND TALKING TO BANK THEY DO NOT WANT TO WORK WITH ME. I CANNOT AFFORD THIS.. WOULD IT BE BETTER TO SURRENDER MY VEHICLE I DO NOT WANT TO FILE BANKRUPTCY BECAUSE IF I COULD JUST GET RID OF TRUCK PAYMENT I WOULD BE JUST RIGHT. I CANNOT AFFORD ANYTHING EVEN A PAYBACK OF AMOUNT LEFT. WHAT CAN I DO?
If you cannot afford the payment then the options are to either voluntarily turn it in or try to sell it and get enough to cover the loan. It sounds like you may want to try to sell it and pay back as much of the loan as possible and, prior to doing so, see if you can get a loan for what the deficiency amount would be and then you would pay that back. Point is, you almost always will be able to get more for the vehicle by selling it than having the lender sell the vehicle for you.
Hello back in 2013 i co signed for a car for my daughter who no longer wants the car. She took the car and left it here at my house and I can’t drive the car cause it’s stiff shift. The car is in her name and I co signed for it. No dealership wants to pay of the car cause it’s not worth what the bank loan is for. I need help in what I need to do. I can’t pay for it cause I have my own car loan to pay for. I was told to get a lawyer to protect myself. Any advice?
You will be on the hook for the car since you co-signed on it. I would try one of a few things. You could sell the vehicle for as much money as possible and see if you can then get a personal loan to pay off the deficiency and then work towards paying that. You could also try to make payments on the vehicle the best you can. Finally, you could always look to file bankruptcy and wipe the debt out of your name.
Purchased a truck Jan 19th its now April 21 and the engine has gon out on it . Will cost $10,000 to repair and i owe $20,000 on vehicle . Factory nor extended warranty will cover repairs.. Is voluntary repo next best option or even possible at this point?