If you fall behind on payments for your auto loan, you risk having your vehicle repossessed.
The truth is, a repossession does more than leave you without a car. Repossessions also negatively impact your credit for years to come, which makes it harder to qualify for another car loan, credit cards or a mortgage.
But the good news is, you’re NOT powerless! You have options!
What exactly is a repossession?
A repossession is when an auto lender takes possession of your vehicle, sometimes without any warning, or even without a court order.
Depending on what state you live in, vehicle repossession laws vary. Most auto loan contracts include details about how and when your auto lender can repossess your vehicle.
Repossession usually occurs after you fall behind on your payments. In fact, depending on your contract, your lender may be able to start the repossession process after just the first missed payment!
That means there are A TON of families out there who NEED a Credit Hero!
There are two major types of repossessions ...
Voluntary and involuntary.
Voluntary is when you give your car back to the lender, usually because you can’t afford to make the monthly payments.
But usually, when people talk about repossession, they're talking about the other kind.
Involuntary repossession is when the lender comes to take back the car.
If you’ve ever tried to help a client that had a repo on their report, you probably found they are generally pretty stubborn to get rid of.
Repossessions are a little different from almost any other type of item on a credit report because of the little nuances within the contract of auto loans.
But, as a Credit Hero, you’ve got options!
The 3 EXPERT TACTICS for permanently removing repossessions.
- Factual Dispute
The first tactic is a factual dispute tactic you can use to try to remove a repossession.
Usually, it works fairly easily, but it ONLY applies to loans that
- have GAP insurance
- have been sold at auction after the repossession
- then the balance is sold to a 3rd party
Remember, it must meet all of those conditions in order for it to work!
Most vehicles financed from dealerships have GAP insurance, and if you have gap insurance for the life of the vehicle, a prorated portion of the vehicle IS covered IF and only IF the vehicle is considered a loss.
A repossession is a loss, so when this happens the refund is sent to the FINANCING COMPANY.
Now, the FINANCING COMPANY receives this GAP payment long after the account is sold to the 3RD PARTY DEBT COLLECTION AGENCY and never updates the true balance of the loan on your credit report.
This means the balance is INACCURATE (FACTUALLY INCORRECT) and...
THAT is the key to removing the repossession using this strategy.
So How EXACTLY Do I Use This Strategy?
Here are the ins and outs, and remember, timing is critical!
You’ll want to complete Step 1 and 2 the same day:
- Demand validation with a certified mail, return receipt requested on the account with the 3rd PARTY DEBT COLLECTION AGENCY. Chances are they’ll respond with the wrong balance…
That’s because GAP paid the FINANCING COMPANY and the FINANCING COMPANY did not report the payment to the 3rd PARTY DEBT COLLECTOR.
- Contact your GAP Company and request a refund for the loss of the vehicle. They’ll immediately tell you that a payment has already been made to the FINANCING COMPANY. You need to ask for proof and they’ll send you a receipt for the payment made to the financing company.
- Assemble a large envelope sent certified mail, return receipt with several documents to send to the credit bureaus, and include the following:
- a) a copy of the receipt from the GAP company
- b) a letter to the 3 BUREAUS explaining the balance reported was not accurate
- c) a copy of the validation demand you sent the 3rd PARTY DEBT COLLECTION AGENCY
- d) a copy of the signed return receipt from your debt validation letter
- e) the response received from 3rd PARTY DEBT COLLECTION AGENCY showing wrong balance
That usually results in a DELETION!
If not, you should file a complaint with CFPB, then resend EVERYTHING you had previously sent along with a COPY of the CFPB complaint to the bureaus and or the 3rd PARTY DEBT COLLECTION AGENCY and demand removal.
- Credit Sale Discrepancy
The second strategy I like to call a “Credit Sale Discrepancy”
If the repossession you're trying to remove doesn’t fit the criteria for the first tactic above, Factual DIspute, here’s a different factual dispute tactic.
It’s called a Credit Sale Discrepancy. This one’s often successful simply because of a minor detail in the terminology used to indicate the type of account.
You see, auto dealerships are set up in one of two ways.
Number 1, an Installment Loan
This means, the dealer lends you money and you pay the dealer in “installments” until the loan is paid in full.
Or, Number 2, a Credit Sale
This means the dealer sold the loan to a lender.
Most dealers prefer “Credit Sales” because they get paid immediately, as opposed to collecting interest over a long period of time with loans.
If you or your client signed your documents at a dealership, there’s about an 80% chance it is a “Credit Sale”, not an “Installment Loan”.
Take a good look at your credit report, and if it says “loan” (it usually does), you can factually dispute the repossession based solely on that specific factual error!
Letter Example: “The account you are reporting is identified as an “installment loan” which is factually incorrect. The true account type for this account is a “Credit Sale Agreement”. I have the right to an accurate credit file and discrepancies like this are unacceptable. Please remove this account from my credit file immediately.”
Remember, if you are confident about the fact that it is misreported, don’t give up if they verify it.
You can always follow up with a creditor or bureau warning letter, you can file complaints and follow up again, and even then, if they are unwilling to correct your report – you always have the option of working with an FCRA attorney that may be able to not only permanently remove it, but possibly settle and put cash in your clients pocket.
- “How the heck was I late paying, after you took the car?”
This is the third and final expert strategy to remove repossessions, which I jokingly call, “How the heck was I late paying, after you took the car?” strategy.
If you or your client’s vehicle has ever been repossessed, here’s what happens. Normally, the vehicle is sold at auction for a fraction of what is owed, often leaving a deficiency balance. Once that happens, how is it possible that the original creditor is still reporting late payments?
The answer is, it isn’t, but they often keep doing it, and …
That’s your KEY to identifying a factual error and to getting the repossession removed.
In summary, reporting of late payments after a repossession occurs is an error. When this happens, simply dispute the error with pinpoint accuracy. At this point, it’s inaccurate for the original creditor to be reporting payment defaults.
Letter Example: “The account you are reporting is identified as a ''repossession”, yet you continue to report late payments. Since the vehicle is no longer in my possession, it would be impossible for me to default on payments after the fact. I have the right to an accurate credit file and discrepancies like this are unacceptable. Please immediately remove this account in its entirety from my credit file.”
A monthly payment should not exist after a repossession has occurred.
Another, related kind of discrepancy to look for is a “monthly payment amount” appearing after the vehicle has been repossessed. A monthly payment should not exist after a repossession has occurred. If this shows up, you can factually dispute it!
So, as promised, I’ve shared with you my 3 advanced strategies that help to remove repossessions.
Remember, these methods are very specific. So if the repossession you’re looking to remove doesn’t fit the criteria I outlined in those tactics, you can always try basic disputing methods ... but if you really want to zero in on the specifics, go ahead and give these strategies a try!
If you want to get certified in disputing and launch your very own credit repair business in just a couple weeks, I invite you to join our Credit Hero Challenge!
It’s an amazing program that has helped tons of Credit Heroes get their first paying clients, get certified in disputing, and gain confidence in knowing they are launching their credit repair business on a solid foundation that allows them to grow and scale FAST!
We’re starting again soon, so sign up now at creditherochallenge.com today!
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