How to Remove a Repossession from Your Credit Report

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4 months ago

How to Remove a Repossession from Your Credit Report

by

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4 months ago
How-to-Remove-a-Repossession-from-Your-Credit-Report

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A repossession is one of the worst things that can happen to your credit – and to you. No one is happy being a part of the repossession process. It is painful, embarrassing, and throws your entire life into disarray. It is something best avoided at all costs and by any means necessary.

One of the most horrible things about a repossession is what it does to your credit score. A repossession can be a poison pill for even someone with the best credit score and it can end up affecting your ability to get a car, a cell phone, a home, even a job. The repercussions of having a repossession on your report is almost worse than the actual repossession itself. It gives you even more reason to avoid one whenever possible.

However, if it is impossible to avoid and you end up having something repossessed, you shouldn’t assume that the world is over and you could never recover. There are ways to come back from a repossession. In fact, there are ways to get it removed from your credit report entirely. So many people believe that they just have to accept their repossession and the damage it does to their credit score but that isn’t the case. There are ways to navigate the financial landscape and get your credit score back in tip-top shape.

What is a Repossession?

Before we discuss how to get rid of a repossession, we should first discuss what it exactly is. There is some confusion among many about what constitutes a repossession, how it happens, how it is initiated and the effect it can have. Let’s clear that up first and foremost.

By definition a repossession is a term used to describe the taking back of property after a borrower has defaulted on a single or several payments. When this happens, the entity that lends the property either repossessed it or pays a third-party service to do it on their behalf.

When you signed on to accept a loan, you made a few promises. Firstly, you promised that you would pay the loan back. Secondly, you agreed that if you failed to do so, the institution offering you the loan has the right to take back the vehicle or property that you are using the loan to acquire. If the property repossessed is not worth enough to pay off your debt, you will still own what is left on your balance.

Essentially a repossession is the result of you not paying back money that was loaned to you. When you are agreeing to a loan, you are promising to pay back the amount – plus interest – over time. Most loans require monthly payments. If you default, or not pay back your loan, the entity that gave you the money will come to collect what you owe.

Repossessions are rarely done out of the blue. There are often multiple warnings from the bank or car dealership or financial institution giving you the loan. You will be warned plenty of times before a repossession is enacted. That often doesn’t matter because sometimes people get behind on paying off their loans and do not have enough money to keep up.

Because of the severity of a repossession, it can do great damage to your credit report. It can wreak havoc on your ability to move financially. There are many apartment complexes that will not allow you to live with them if you have a repossession on your report. Other agencies, like cell phone providers, car dealerships, even businesses offering jobs, will be hesitant to associate with someone who has been a part of a repossession.

Additionally, a repossession will stay on your credit report for years. For example, an automobile repossession stays on your credit report for seven years. Those seven years start on the original date of the delinquency. Thankfully, the impact that a repossession has on your credit score lessens over time. It is most negatively impacting your score at the beginning of the seven years and is seen as less severe as the time goes on and the clock runs out. Taking additional steps, like paying other bills on time, makes a repossession even less egregious as the years go on.

There are actually two types of repossessions: voluntary and involuntary. The involuntary repossession is the one just described: a repossession initiated by the loaning agency after someone failed to pay them back. The voluntary repossession is when a consumer can no longer make their payments on time and voluntarily gives back the property to the lender. While you may think that a voluntary repossession is better for your credit score, it actually isn’t. Both are incredibly detrimental to your credit report. No matter if it is voluntary or involuntary, the bottom line is the same: you cannot pay your debts and the property is having to be returned. That message is all that other lenders need, they know that you cannot pay back what is given to you.

But what if you want your credit report to be spotless without the repossession? Are there ways to combat one and get it scrubbed from your record? Yes, there are.

How to Remove a Repossession from Your Credit Report

Yes, repossessions can be removed from your credit report in some instances. However, these instances aren’t very common and they are not without their own issues and it still isn’t easy to remove the repossession. However, many people attempt to do just that because the benefit of not having a repossession on your score is such a huge benefit to your well-being.

Dispute Your Repossession

The first way to remove a repossession from your credit report is to simply file a dispute. This is you saying that you are fighting back against the repossession and claiming that it wasn’t necessary or just. There is no guarantee this will work and it is a long process but, if done correctly and honestly, you can get your credit report in much better shape by doing this.

The process for filing a dispute starts with you going through your credit reports and looking for anything inaccurately reported. You will need to go over your reports with a fine-tooth comb and really look for any inaccuracies. You can dispute anything and all disputes will have to be investigated by the credit bureaus that issue the report. Their process will involve contacting you and requesting information related to your repossession. You will need to have time and energy ready for the investigation and be prepared to send in a lot of information to verify what you have claimed.

If the investigation moves forward, the bureaus will ask the creditor to verify all information related to your repossession. If the lender or creditor isn’t able to verify all of that information and prove that the repossession was completely fair, accurate and necessary, the credit bureaus can remove the repossession from your report.

Here are more details about disputing a repossession and what it takes. You will see there are a lot of steps to take. Again, it may be worth it if it pays off.

  • Check your credit report and look at all reported information: Don’t forget that you can get a free credit report from each of the credit bureaus. You only get one free annual report a year so be sure to make it count.
  • Take a note of all and any errors you notice: This is perhaps the most important step with disputing a repossession. Look for literally any mistake, from incorrect dates to inaccurate amounts paid or asked for. Every little mistake can help you so do not skip a single one.
  • Gather all the evidence you’ll need: This includes your personal information such as your identity, employment status, and other things that may be related to your ability or inability to pay.
  • Report the inaccuracies: You need to then turn in all of your evidence and claims to the credit bureau. Thankfully, you don’t have to wait long once submitting everything. They must investigate and report back to you within 30 days.
  • If the lender can’t produce evidence: If the creditor or lender can’t prove that the repossession was accurate and necessary, it will be removed from your account and credit report.
  • If the lender can produce evidence: If the loaner can prove that they were right to create a repossession then the account will not be removed and the repossession will sit on your credit report/score for the next seven years.

Negotiate with your Lender

There is another way to get a repossession removed and that requires that you negotiate with the lender who offered you the loan.

This is another long, complicated process but it is also worth your time if it pays off. And the benefit isn’t only for you. A lender loses money when they go through the repossession process. In reality, they would much rather that you just pay off your debt even if they don’t get their payments on time. The truth is that they are willing to hear you out and possibly change the terms of your loan if it means they are guaranteed their money.

When you negotiate with your lender, it is important that you attempt to settle your debt and remove it from your credit score. They may allow you to set up a payment schedule that actually works for you, one you can keep up with and stick to. Be honest with the lender, do not make promises you cannot keep. Unkept promises are what lead you to this situation in the first place so it is very important that you are legitimate and honest with what you can and cannot do financially.

If you can agree to these new terms with your lender and are able to show that on-time payments are possible, the lender can start the process of removing the repossession from your credit score. It is vital that you follow the terms agreed to between you and the lender and make sure you have all of the agreement in writing.

Keep in mind that negotiating with the lender may not always be possible. Those providing your loan may not allow you to speak with them, they might not be open to the idea of negotiation. Additionally, if they have already repossessed your assets negotiations may not be possible.

Are There Are Other Ways to Remove a Repossession?

There are other ways that you can use to remove a repossession from your credit report. In fact, there is an entire industry revolving around removing repossessions. Credit repair companies can help you remove negative information from your credit reports. However, they are not a sure thing and they are not necessarily inexpensive. So while they are an option, there is no guarantee that it will work. However, it is something that you should investigate depending on how much money you are willing to spend and how much risk you are willing to take to clear your credit report.

Will I Ever Get a Loan Again After a Repossession?

Some people fear that once they are a part of a repossession then they will never be able to get a loan again. That fear isn’t completely unfounded since a repossession is one of the worst things that can pop up on your credit score. However, you can get a loan after being subject to repossession. Yet, it may be hard to find a proper loan with agreeable terms and conditions because not many lenders are willing to loan money to someone who is a major lending risk.

Finding a loan after repossession is possible but it will require a lot of hard work and will not be easy to locate. However, you may need a cosigner to agree to any loan with you. There will be additional steps and hurdles to jump over but a loan after a repossession is definitely possible.

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