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Voluntary Repossession of a Car in Florida: Should I Do It?

If you have fallen behind on your car payments and don’t see a way to catch up, you’re either waiting for the car to be repossessed or trying to consider your options to get out from under the debt. Rather than seeing your car getting towed, you can choose to give the car back to the lender voluntarily. Is this the best option or should you consider an alternative to voluntary repossession of your car? We’re exploring the issue to help you make an informed decision for your future. 

Understanding Car Repossession

First, it’s important to understand car repossession and how this can affect your future. When you miss several car payments, the lender can repossess the vehicle. The lender can then choose to sell the car or auction it off, and if the car sells for less than you owe, you are still legally responsible for the balance of the debt. On top of this, you are also responsible for the costs of repossession, including administrative and processing fees, towing costs, and vehicle storage fees. Once the vehicle is out of your possession, the leftover debt is an unsecured debt, so the lender can sue you for the balance, and they may even be able to garnish your wages to pay the remainder. 

The missed payments, repossession, and judgment of leftover debt are all separate negative comments on your credit report. All of these can make it nearly impossible to get a car in the future, rent an apartment, and even get a job if the employer runs a credit check. 

Should You Choose Voluntary Repossession of Your Car?

Instead of waiting to have your car repossessed, you can choose to surrender the car back to the dealership. Not only does this spare you from having your car towed unexpectedly while you’re at work or in the middle of the night, but it also saves you repossession and towing costs. Also, when you choose voluntary repossession, the lender may not report the repossession on your credit or classify the repossession so that it shows up in a less damaging way than a standard repo, though it’s important to verify this prior to surrendering your car. 

However, even when you surrender your car, you are still responsible for any leftover balance due after the lender sells or auctions the car. Like a traditional car repossession, if you are unable to pay, the lender can sue and your wages may be garnished to pay the debt. 

How Bankruptcy Can Assist You with Voluntary Repossession of Your Car

If you are behind on your car payment and unable to catch up in your current financial state, filing for bankruptcy may be the right option as it can provide relief from your debt. 

Chapter 7

When you file for Chapter 7 bankruptcy, you can surrender your car to the lender. Once this happens, the debt is unsecured, and the bankruptcy will discharge the debt, erasing it from your record and stopping any wage garnishment.

Chapter 13

With Chapter 13 bankruptcy, your debt is reorganized and restructured so you are making smaller payments on your debt over a period of three to five years. You may be able to keep your car under Chapter 13 by either: 

  • Having a lower interest rate and lower payment for the next three to five years. At the end of the time period, the debt is eliminated and you own the car in full.
  • Pay only the actual value of the car without the interest and fees to get a lower payment. Once you complete this repayment, the debt is discharged. 

Schedule a Free Consultation with a Bankruptcy Lawyer

Before you choose voluntary car repossession, schedule a free consultation with a bankruptcy lawyer at Stiberman Law. We can help you go over your finances and discuss your options so you know the best path forward out of debt. Call us today at (954) 922-2283 or fill out the form below to get started.

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