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  1. #1
    Join Date
    Oct 2016

    Default How to Settle an Old Car Loan with the Car Still in Your Possession

    My question involves collection proceedings in the State of: CT.

    Here it goes, I bought a car about a year ago. Went on debt protection (an insurance I bought in case I lost my job so that my car loan may be paid in the meantime). I was out of work for about 8 months and did not pay the loan for rwo of those months. Now the car is obviously up for repossession and it is charged off on my credit report. Now that I am in a better financial place I am hoping to some how continue to pay the loan, and or remove this debt from my credit report. I owe about 20k on the vehicle and it is also not drivable. What shall I do?

  2. #2
    Join Date
    Mar 2013

    Default Re: Settling an Old Car Loan with Car Still in Possession

    If the loan has been charged off, it may now be in the hands of a collection agency.

    One option is to call the collection agency and arrange a payment plan if possible. Or, if you have lots of cash you can offer a lump sum discounted settlement. Just understand that a creditor isn't likely to discount the debt for payment, it'll be just for cash if it's done at all. And you need to get the settlement agreement in writing.

    However, if the car is not drivable because it's in disrepair and you don't want to spend the money on fixing it, making payments on it is throwing good money after bad.

    Another option is to just let them pick up the car (voluntary repo) but I suspect that the auction sale price won't cover the balance so you'll be hit with the deficiency.

    Yet another option is to find a buyer (with either fixing it or not fixing it) and put up your own cash to make up the difference in the loan balance.

    And one more option is bankruptcy as a last resort.

    Unfortunately, the financial damage is already done so you'll have to determine the quickest and least costly solution.

    Obviously, you can ignore the situation and hope you never get sued. But CT has a 6 year statute of limitations. Creditors tend to ride that out and sue at the last minute after adding interest and attorney fees that make the debt skyrocket by then.

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