If I plan to surrender a vehicle to a creditor that I paid 3 years on, what are my rights before I contact the creditor?

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If I plan to surrender a vehicle to a creditor that I paid 3 years on, what are my rights before I contact the creditor?

This problem is caused by my wife’s loss of her job.

Asked on November 17, 2011 under Bankruptcy Law, Texas

Answers:

B.H.F., Member, Texas State Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Before you contact the creditor, read your purchase agreement carefully.  Most of your rights will be set out in that contract.  You don't have a huge number of rights if you voluntarily surrender a vehicle, but generally by statute or contract, you do have the right to be notified of when the vehicle will be resold to insure that the sale of the vehicle is commercially reasonable.  This right is valuable because if the vehicle is not resold at a good price, you could still end up being liable for part of the remaining debt.  For example, if you still owe $5000 on the vehicle, but it only sells for $4000 at an auction, the creditor can still come after you for the $1000 balance.  If the vehicle is not resold in a commercially reasonable manner that is designed to get a decent price for the car, then you may be able to avoid paying on the balance that is due.  Sometimes your contract will have even more rights, but when you go to surrender the vehicle, the creditor will ask you to sign another document.  Read this carefully.... make sure that you are not waiving any of the rights set out in your contract.  Some will "require" a debtor to waive their right to notice.  You do not have to waive your rights to conduct a voluntary repossession.  If you are going to waive your right to future notice of sell, ask them to add to the contract or letter that you are discharged from any further liability on the account.  The hard thing about paying on a car for three years, is that you don't get any of it back.  Three years is half-way or more to being done.  As an option to voluntary repossession, you may want to consider refinancing to re-stretch the payments thereby making them more affordable.  If your creditor is not willing to work with you, talk to a couple of your local banks or reputable finance companies. 


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