There are three expert-level tactics for removing Repossessions from Credit Reports, and today, I will walk you through each one!
A Repossession is one of the most damaging items that can appear on a Credit Report. This is because every step of the Repossession process hurts your Credit from missing your payments and defaulting on your loan to the collection accounts or court judgments that may follow. It all affects your Credit Report and harms your Credit Score.
Repossessions may have declined during the Pandemic, but due to the ending of economic relief programs, rising inflation, high gas prices, and increasing job cuts, their numbers are now growing rapidly.
2.2 million vehicles are Repossessed every year. That's 5,418 repossessions every day or about 1 Repossession every 16 seconds.
Repossessions create short-term stressful situations and long-term severe financial problems, BUT with the right strategy, you can remove them from Credit Reports and get back on the road to financial freedom!
HOW THIS RELATES TO US
For anyone new to Credit Repair, Repossession happens when you fail to make payments on a loan, and the lender takes back the property you put up as collateral. This can include cars, boats, or other high-value items. But the most common are cars.
There are two types of Repossessions: Voluntary and Involuntary.
A Voluntary Repossession happens when you give your vehicle back to the lender because you can't afford the payments or because you want to avoid the experience of having your vehicle taken from you.
Involuntary Repossession happens when the lender takes back the vehicle without consent and, in some cases, without warning.
According to the Credit Bureaus, the impact of Voluntary and Involuntary Repossessions are relatively the same: they can drop your Credit Scores 100 points or more, and they remain on your Credit Reports for 7 years, starting from the date of the first missed payment.
Repossession Laws vary by state, and you should check with your Attorney General's Office to learn the rules that apply in your area.
THE THING TO REMEMBER
You want to avoid Repossessions whenever possible. If you think you're at risk of missing your loan payments, consider contacting your lender and requesting refinance options to get more affordable terms. Or, consider selling the vehicle if you can pay off the remaining loan balance.
Almost any option is better than having a Repossession on your Credit Report. But if you're stuck with it, don't worry. Three expert-level tactics can get them removed!
WHAT YOU NEED TO KNOW
As always, you start the Credit Repair process by Disputing any incorrect information that appears on the Credit Report. And you send that directly to the credit bureaus. Beyond that, there are three Expert-Level Tactics for Removing Repossessions from Credit Reports. I'm going to walk you through each one, so you might want to take notes!
TACTIC 1: FACTUAL DISPUTE
Factual Disputing usually works like a charm, but it's advanced, and it only applies when; the loans have GAP insurance, the vehicle was sold at auction after repossession, and the balance was sold to a 3rd party.
It must meet all of those conditions, or you're wasting your time.
But here's the good news, most vehicles financed from dealerships have GAP insurance. If you have GAP insurance for the life of the vehicle, a pro-rated 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. The Financing Company receives GAP payment long after the account is already sold to a 3rd Party Debt Collector, and they never update the true balance of the loan on your Credit Report. This means the balance is inaccurate, and you can Factually Dispute it.
Now, how did you actually file the dispute?
First, remember, with all Credit Repair strategies, timing is critical, and in this case, you must complete STEP 1 and STEP 2 on the same day! Okay?
STEP #1 - Send a Validation Demand Letter by certified mail with a return receipt and send it to the 3rd Party Debt Collector.
If you don't already have a Validation Demand Letter Template, you can download it FREE at 5 Dispute Letter Templates.
The 3rd Party Debt Collector will usually respond with the wrong balance because the GAP insurance paid the Financing Company, and the Financing Company didn't report the payment to the 3rd Party Debt Collector. Still with me? Great!
STEP #2 - Contact the GAP Insurance company and request a refund for the loss of the vehicle. Remember, this has to be done on the same day as Step 1.
The GAP Insurance company will tell you that a payment has already been made to the Financing Company. You need to then ask for proof of that payment, and they will send you a receipt for the payment.
STEP #3 - Assemble a large envelope with several documents to send via certified mail with a return receipt to each of the three Credit Bureaus.
It should include the following:
- A letter to the Bureaus explaining the inaccurate balance they are reporting
- A copy of the receipt from the GAP company
- A copy of the Validation Letter you sent to the 3rd Party Debt Collector
- A copy of the signed return receipt from your Validation Letter
The response you received from the 3rd Party Debt Collector that shows the inaccurate balance
If the bureaus don't respond appropriately or if they respond with a Stall Letter, you may need to request a reinvestigation, demand to know their method of verification or send them a bureau warning letter.
This process takes time, and it usually works, but if you don't get the result you want, you may want to file a complaint with the CFPB, the FTC, or your State Attorney General, or even bring in an FCRA attorney and take them to court and you may wind up with a cash settlement.
The Reinvestigation, Method of Verification, and Bureau Warning letters are FREE to Download at Credit Repair Cloud - 5 Dispute Letter Templates.
TACTIC 2: CREDIT SALE DISCREPANCY
If the Repo you're trying to remove doesn't fit all the criteria I mentioned in TACTIC 1, a Credit Sale Discrepancy is another proven removal option.
It means there's a minor detail issue in the terminology used to indicate the type of account listed on your Credit Report.
Now, Auto Dealerships are set up to make sales in one of two ways: Installment Loans and Credit Sales. An Installment Loan means the dealer lends you money, and you pay them back in installments until the loan is paid in full. A Credit Sale means the dealer sold the loan to a lender.
Most dealers prefer Credit Sales because they get paid immediately instead of collecting interest over time with loans. If you bought your vehicle at a dealership, there's about an 80% chance it is a Credit Sale.
So take a good look at your Credit Report. If it says "loan," and it usually does, you can dispute the Repossession based solely on that factual error. It wasn't a loan. It was a Credit Sale, and the error must be removed.
TACTIC 3: POST-REPO LATE PAYMENT
After a vehicle is Repossessed, it's usually sold at auction for a fraction of what is owed, often leaving a deficiency balance. But somehow, the original creditor continues to report late payments.
You might ask, "How can they hit you with late payments after they took the car?" Well, they shouldn't, but they do!
When this happens, simply dispute the error, pointing out exactly when the vehicle was repossessed and reminding all parties involved that defaulting on payments beyond that date is inaccurate.
The Credit Repair process can be slow and complicated, but these three Tactics have been successful for thousands of people. Don't give up!
MY FINAL POINT
Repossessions are some of the most damaging items appearing on Credit Reports, but removing them can have the greatest impact. Disputing a Repossession may not be the simplest process, but boosting a score, and changing a life, is always worth the effort!
I'LL END BY SAYING
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