Hi,
For various reasons, many people find themselves faced with a sizable deficiency balance from a car, camper, trailer home etc., loan. In most instances, deficiency balances could be settled for far less than the amount represented by the creditors, or, in many cases, third party collection agencies. The keys to negotiating a successful settlement on a deficiency balance are:
1) The length of time the deficiency balance has been owed. If the deficiency balance has been accruing interest for many years, the creditor will take substantially less money to settle.
2) The payment history on the loan prior to the deficiency balance being created factors into the willingness of the creditor to negotiate a settlement on the balance.
If only one or two payments have been made on the loan prior to repossession, it is unlikely that the creditor will be willing to offer much of a settlement.
3) When a creditor receives a settlement offer, one of the first things the creditor does is analyze what he or she believes to be a reasonable settlement offer and the ability of the debtor to repay the deficiency balance in full. It is necessary to give all the pertinent details as to why the settlement offer is legitimate and is the best that can be done by the debtor.
4)If the deficiency balance that is owed is being handled by a third party, and the third party refuses the settlement offer, be sure to contact the original creditor and offer the same settlement to the creditor. In most cases, the creditor will accept a reasonable settlement.
5) If it is not possible to come up with a lump sum settlement, offer a payment schedule that can be kept. Once again, if the third party refuses the payment schedule, contact the original creditor and explain why that is the only available solution to handling the deficiency balance.
When negotiating any deficiency balance, keep in mind that the creditor is entitled to 100% of the balance and will only accept a settlement if it is financially justified. As soon as a deficiency balance is created, be sure to get in touch with the creditor, as communication is the key. A Performance Bond guarantees the faithful performance of the contract and payment of materials and labor by the contractor to all subcontractors and material suppliers.
Until later,
Alan
Showing posts with label auto loans. Show all posts
Showing posts with label auto loans. Show all posts
Tuesday, September 4, 2007
Monday, August 13, 2007
Deficiency Balances: Auto Loans
Hi,
One of the most unexpected major debt problems that occur today for consumers is when a deficiency balance is created on their auto loan. A deficiency balance is usually created when a car has to be repossessed by the lender. The lender is then required to sell the car for what is defined as "fair market value", deducting the expenses of repossession and any other liquidation fees, then applying the remaining proceeds from the sale of the car to the balance of the loan. In many instances consumers are unaware of the fact that they are responsible for the full payment on the loan, and that their vehicle is only collateral on the loan. If a consumer gets into a situation in which it becomes apparent that he or she is not going to be able to continue making vehicle payments, and that the lender can no longer extend any more time without payment, there are a few actions a consumer can take prior to repossession:
1) Make an agreement with the lender that the consumer will sell the vehicle for the lender. The reason is that because of the vested interest in the sale price for the vehicle, the consumer will get a higher sales price than the lender. Typically lenders are not particularly good at selling vehicles and don't care if a vehicle is sold for top dollar.
2) If repossession is imminent, take pictures of the inside and outside of the vehicle and get the Kelly Blue Book value of your vehicle. This information will assure you that the lender is getting "fair market value" for your vehicle in order to apply the proceeds against your loan. In some instances, to save time lenders will briefly advertise vehicles and then auction the vehicles at wholesale to dealers. If you feel that you have been a victim of this practice, you need to approach your lender with the figures you got from the Kelly Blue Book and ask the lender to explain why it was not sold for fair market value. In many cases, this will allow you the upper hand in negotiating a reasonable settlement of your deficiency balance. If the lender refuses, inform the lender that you will be sending pictures of your vehicle, plus the Kelly Blue Book value of your car to the office of the Attorney General to ask them to look into the matter.
3) When negotiating your deficiency balance, your lender is going to consider the following:
a) The age of the debt.
b) The amount of the debt.
c) The type of the debt: ie, was it a new or used vehicle.
d) Your ability to repay based upon your credit history.
e) How straightforward you have been in handling your loan from the outset.
In most cases, a lender will settle a deficiency balance if the settlement offer is reasonable. As in dealing with any other creditor, success or failure of negotiating a settlement might hinge upon how well you have communicated with the creditor throughout your history.
Until later,
Alan
One of the most unexpected major debt problems that occur today for consumers is when a deficiency balance is created on their auto loan. A deficiency balance is usually created when a car has to be repossessed by the lender. The lender is then required to sell the car for what is defined as "fair market value", deducting the expenses of repossession and any other liquidation fees, then applying the remaining proceeds from the sale of the car to the balance of the loan. In many instances consumers are unaware of the fact that they are responsible for the full payment on the loan, and that their vehicle is only collateral on the loan. If a consumer gets into a situation in which it becomes apparent that he or she is not going to be able to continue making vehicle payments, and that the lender can no longer extend any more time without payment, there are a few actions a consumer can take prior to repossession:
1) Make an agreement with the lender that the consumer will sell the vehicle for the lender. The reason is that because of the vested interest in the sale price for the vehicle, the consumer will get a higher sales price than the lender. Typically lenders are not particularly good at selling vehicles and don't care if a vehicle is sold for top dollar.
2) If repossession is imminent, take pictures of the inside and outside of the vehicle and get the Kelly Blue Book value of your vehicle. This information will assure you that the lender is getting "fair market value" for your vehicle in order to apply the proceeds against your loan. In some instances, to save time lenders will briefly advertise vehicles and then auction the vehicles at wholesale to dealers. If you feel that you have been a victim of this practice, you need to approach your lender with the figures you got from the Kelly Blue Book and ask the lender to explain why it was not sold for fair market value. In many cases, this will allow you the upper hand in negotiating a reasonable settlement of your deficiency balance. If the lender refuses, inform the lender that you will be sending pictures of your vehicle, plus the Kelly Blue Book value of your car to the office of the Attorney General to ask them to look into the matter.
3) When negotiating your deficiency balance, your lender is going to consider the following:
a) The age of the debt.
b) The amount of the debt.
c) The type of the debt: ie, was it a new or used vehicle.
d) Your ability to repay based upon your credit history.
e) How straightforward you have been in handling your loan from the outset.
In most cases, a lender will settle a deficiency balance if the settlement offer is reasonable. As in dealing with any other creditor, success or failure of negotiating a settlement might hinge upon how well you have communicated with the creditor throughout your history.
Until later,
Alan
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