Involuntary repossession is a process that occurs when a lender takes possession of a vehicle that has been financed by the lender.
Most of the time, involuntary repossession happens when a loan is delinquent, and communication has ceased between the borrower and their lender. The number of payments missed for repossession to occur can vary from state to state. However, the consistent factor in all involuntary repossessions is that the borrower has cut off communications with their lender.
Repossession is a scary reality for borrowers who are behind on their loan payments. Any borrower should be aware of their loan contract’s terms and conditions to avoid a repossession.
How Does Repossession Work?
Knowing repossession laws and how repossession works can be very important, especially if you’re trying to avoid it. When it comes to repossession, it is in your best interest to opt for voluntary repossession over involuntary repossession. A voluntary repossession is a voluntary surrender of the asset. The borrower is voluntarily giving their asset back to the lender because they can’t make the payments. This type of repossession gives the borrower more control over the situation. For example, in a voluntary repossession the borrower can work with the lender and/or repo company to arrange for a time to surrender the asset.
An involuntary repossession is when the lender takes possession of the vehicle without the borrower’s cooperation. The borrower doesn’t get to pick and choose when the asset will be taken away. The repo company could show up anytime and take the asset. It could be a very inconvenient and embarrassing situation for the borrower.
Regardless of whether it’s a voluntary or involuntary repossession, the lender will usually sell the property in order to recoup as much of the outstanding balance as possible – with any remaining balance still owed by the borrower after the sale.
How Does Involuntary Repossession Affect Credit?
Involuntary repossession can have a significant impact on a person’s credit score. The process is initiated by the lender due to missed payments or delinquencies. Often times, this will result in a derogatory mark appearing on the borrower’s credit report. These marks will remain visible for up to seven years, having a negative effect on any future loans the borrower applies for. As credit-scoring companies use different models to calculate scores, it can be difficult to predict the exact effect of repossession on credit scores.
It is possible that borrowers may be able to lean towards a voluntary repossession instead, which could cost less in terms of fees and penalties – nevertheless, the negative effects on one’s credit should still be expected.
Our Role in Involuntary Repossessions
With an involuntary repossession the lender hires us as the repo company to get the asset from the borrower. Unlike a voluntary repossession where we work with the borrower to arrange a time and location to get the asset, involuntary repossessions involve little to no communication with the borrower. Working with the lender, we determine when we will come and get the asset, and when we come can be an inconvenient and embarrassing situation for the borrower.
As a repo company with many years of experience, we understand that repossessing an asset can be stressful and emotional for borrowers. There is nothing worse than having a repo company unexpectedly show up to take a borrower’s asset away in front of their neighbors. It’s not fun for the borrower and it’s not fun for us. That’s why we highly recommend borrowers avoid repossession in the first place and if it’s inevitable, to keep lines of communication open with their lender throughout the repossession process.
As an experienced repossession company in Montana, we work with lenders throughout Montana, Wyoming, and the entire Pacific Northwest to facilitate involuntary repossessions. Contact us to learn more about our services and how we can help!