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Gap Insurance Repossession Article
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Consumer Myths About Voluntary Repossession
from:Unfortunately for many thousands of consumers there are a huge number of myths around the concept of voluntary repossession. Since many fraudulent marketing agencies, con artists and general scam websites repeat these myths some consumers, particularly those already stressed with financial problems, fall into the traps these individuals offer as quick "get out of debt or financial trouble" programs. By taking the time to research through a reputable credit counseling service, through the Better Business Bureau or talking to an attorney or legal advisor about your options for either voluntary repossession or involuntary repossession, you will have a better understanding of your options.
The following are the most common myths about voluntary repossession, which is surrendering the item to the creditor without the need for the creditor to go through a repossession company or court process, depending on where you live.
Myth 1 – Voluntary repossession won't affect your credit rating.
While most of the scam sites or telemarketers don't come right out and make that statement, they carefully word their script to imply that a voluntary repossession is better for your credit score than in involuntary repossession. In reality they are both treated exactly the same by the three major credit reporting agencies. They both have a huge negative impact on your credit score and will remain on your record for seven years. Even a small voluntary repossession like a stereo or a computer system can have a very negative consequence.
Myth 2 - Once you turn in the vehicle or item, you are free from debt.
This is another very misleading assumption that less than reputable credit companies will attempt to use. In reality even in a voluntary repossession you will be responsible for the difference between what the item is valued at now and what the outstanding balance is. For example, a car that was purchased for $30,000 is repossession with $5,000 paid on the loan. The car is then sold at auction for $21,000, leaving an outstanding balance on the loan of $4,000 which the borrower is accountable for. Co-signers will also be included in both the negative credit ratings as well as the legal requirement to pay any outstanding balances.
Myth 3 – There are no fees involved in a voluntary repossession.
Just like any type of legal action a voluntary repossession has associated legal fees and charges. While you will avoid paying the cost of the full repossession fee, you will still have interest fees, legal fees and possibly even storage fees.
When talking to your lender be sure to understand what benefits you can expect from a voluntary repossession. If you seem to be getting misleading information, be sure to check with an attorney or credit counseling agency before making a decision.
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