Does a Voluntary Repossession Affect Your Credit?

Loan Lawyers, LLC is licensed to practice law in the state of Florida. If you have a legal matter that you would like to discuss and you are NOT located in Florida, please contact your state’s Bar Association to get the information of a lawyer that can assist you in your home state. Thank you.

If you fall behind on your car payments and cannot catch up, you can give your car back to your lender. Lenders call this voluntary repossession, and it can potentially give you some financial breathing room. But before you turn your car over to the bank, you need to consider all the potential consequences. To learn more about voluntary repossession in Florida, contact a skilled car repossession lawyer at Loan Lawyers today.

Can Voluntary Repossession Have an Impact on Your Credit?

One reason many people consider voluntary repossession is to protect their credit score. Unfortunately, giving your car to your lender is unlikely to protect your credit. Many lenders consider a voluntary repossession the same as an involuntary repossession, leading to a negative mark on your credit report.

How Much Does a Voluntary Repossession Affect Your Credit?

Estimates vary, but you can expect a voluntary repossession to lower your credit score by 50-150 points. How big of a drop you will see depends on factors such as your prior credit history and how many payments you made before the repossession. A large drop in your credit score can severely impact your ability to obtain future loans for a car, home, or other large purchases. Some lenders may not give you credit after your score drops, or you may have to accept a loan with a high-interest rate.

How Long Does a Voluntary Repossession Stay On Your Credit?

According to Experian, one of the three main credit reporting agencies, a voluntary repossession is considered a loan default. Loan defaults lead to derogatory marks on your credit report that can last up to seven years. You may be able to remove a derogatory mark from your credit report by paying the balance you still owe on your loan or working out an arrangement with your lender.

Pros and Cons of Voluntary Repossession

There are pros and cons to surrendering your car to your lender if you fall behind on your payments. The benefits of voluntary repossession include the following:

• A better repossession experience — Involuntary repossessions upset many people because they often happen at inconvenient times. A voluntary repossession allows you to choose when you turn over your car, giving you time to make plans.
• Lower repossession expenses — If a lender repossesses your car, you may owe additional fees on top of your loan balance. Voluntarily turning over your car means you do not have to pay repossession costs.
• Less stress on you — For better or worse, turning over your car to your lender means you do not have to worry about the car any longer. You may still owe a balance and have other problems to worry about. But you do not have to worry about maintaining your car or when the bank will take it.

Some negative effects of voluntary repossession of a car include the following:

• Lower credit score — You will likely see your credit score drop after you give your car to your lender, which could impact your financial future.
• You may still owe a balance on your loan — You might need to pay back your lender even after giving them your car, though typically just the remaining balance not covered by the car’s resale. An outstanding loan balance can cause significant financial stress.
• You no longer have your car — You may have ways to get where you need to go after surrendering your car. But these options will likely be less convenient than driving yourself.

Talk to an Experienced Car Repossession Lawyer in Florida Today

The Florida foreclosure defense, debt defense, and bankruptcy attorneys at Loan Lawyers can help you decide whether to voluntarily repossess your car. We will protect your rights and help you find the best way forward from this challenging situation. Call us today or visit our contact page for a free consultation.

The post Does a Voluntary Repossession Affect Your Credit? appeared first on Loan Lawyers.

from Loan Lawyers https://www.fight13.com/does-a-voluntary-repossession-affect-your-credit
via https://www.fight13.com/

Can a Loan Modification Stop Foreclosure?

Loan Lawyers, LLC is licensed to practice law in the state of Florida. If you have a legal matter that you would like to discuss, and you are NOT located in Florida, please contact your state’s Bar Association to get the information of a lawyer that can assist you in your home state. Thank you.

Homeowners who can no longer afford their mortgage payments have options for stopping foreclosure and keeping their homes. Depending on the circumstances, a homeowner may consider applying for a loan modification with their lender to avoid or stop a mortgage foreclosure. But how exactly does a loan modification prevent a homeowner from losing their property to foreclosure? Learn from our Florida loan modification attorneys below.

What Is Loan Modification?

In a loan modification, a lender and borrower agree to change the terms of a loan. Loan modification often happens when a borrower can no longer afford payments under the loan’s current terms. Altering the terms of the loan can provide temporary relief from payments or reduce the monthly payment amount to a more affordable level.

Examples of terms that can be modified include:

• Modifying the type of loan, such as changing from an adjustable-rate mortgage to a fixed-rate mortgage
• Reducing the interest rate
• Extending the loan term
• Pausing payments for a certain period
• Recapitalizing the loan to fold in missed payments
• Reducing the amount owed on the loan, typically by having the lender agree to forgive a portion of the balance

Who Can Use Loan Modification?

Loan modification frequently is used by homeowners who can no longer make their mortgage payments. A homeowner who has defaulted on their mortgage may use loan modification to avoid foreclosure. Lenders tend to grant loan modification to borrowers who have suffered some form of financial hardship but will resume making payments soon or can afford lower payments.

Circumstances where borrowers may seek loan modification include:

• Loss of a job with a reasonable chance of securing new employment soon
• Sudden illness or temporary disability that results in missed time from work or substantial medical bills
• Loss of income due to the death of a financially contributing family member
• Separation or divorce
• Increases in housing or living costs, such as an increase in property taxes

Advantages and Disadvantages of Loan Modification

The advantages of seeking loan modification during foreclosure include the following:

• You can keep your home by pausing payments if you experience temporary financial difficulty or reducing mortgage payments to a more affordable level.
• Loan modification can help you resolve missed payments or a default on your mortgage.
• You may avoid damage to your credit rating that foreclosure would cause.

However, there are disadvantages of loan modification as a way to stop foreclosure, such as the following:

• Most types of loan modification result in you paying more money throughout the loan than you would under the original terms.
• You may have to pay fees as part of the loan modification process.
• You can incur tax liability if the lender forgives part of the mortgage.
• There may be an impact on your credit score if the loan modification is reported to the credit bureaus as a debt settlement.

Talk to an Experienced Foreclosure Defense Lawyer About Modifying Your Loan

If you are facing mortgage foreclosure, a skilled foreclosure defense lawyer can help you learn more about how options such as loan modification can help you keep your home. Contact Loan Lawyers today for a free, confidential consultation with our foreclosure defense, debt defense, and bankruptcy law firm to discuss how we can help you find the best solution to resolve your foreclosure.

The post Can a Loan Modification Stop Foreclosure? appeared first on Loan Lawyers.

from Loan Lawyers https://www.fight13.com/can-a-loan-modification-stop-foreclosure
via https://www.fight13.com/