Car repossession threats must be faced head-on

By PHIL MULKINS World Action Line Editor - 10/6/2009


Dear Action Line: We've already lost one family job and now have fallen behind on our car payments. The bank's letters threaten repossession. If we lose the car, we won't be able to get to the remaining job and will lose both the car and the job, and finally the house. What should we do? — Mrs. A.W.E., Tulsa.

The Better Business Bureau says the economic slump has many people struggling to make ends meet, causing a rise in vehicle repossessions. Losing a car to repossession affects more than just mobility. It also severely impacts credit scores and the ability to get loans or credit cards for up to seven years.

Repossessions rising: The American Bankers Association Web site says the number of repossessed vehicles jumped 12 percent to 1.67 million nationally in 2008 and is expected to increase another 5 percent this year.

A dark cloud: The worst thing you can do when falling behind on car payments is to bury your head in the sand and ignore the problem. Preventing repossession and its negative effect on your credit score is of utmost importance. Auto owners must take responsible action and face this issue head-on or watch their situations grow worse.

Repossession auctions: When the lender auctions the car off for less than its outstanding loan balance, the original owner is still liable for the amount on the contract and must pay the difference between that amount and the auction price. Fees for the repossession firm, car towing, storage and the auction firm's fee might also apply.

Contact lender: The American Financial Services Association says an auto repossession costs the creditor $8,000. The best outcome for you and your lender is keeping you in your car and making payments. To achieve this, lenders are often willing to work with troubled borrowers to develop more agreeable payment plans. Some possible options are loan refinancing, extending or deferring payments, changing payment due dates and waiving fees.

Cost cutting: For people who live where public transportation is scarce, a car usually is a necessity for getting to work, the grocery store or school. If you can't afford to lose your car, consider the items you pay for that you can afford to do without: cable television, eating out, cigarettes and new clothes are just a few examples.

Cheaper vehicle: If you're not upside down on your loan and can pay it off by selling the vehicle, find a less expensive auto with monthly payments more within your means.

Debt management: Ask about a "debt management plan" through the Credit Counseling Centers of Oklahoma — 744-5611 in the Tulsa dialing area or (800) 324-5611 from anywhere in Oklahoma. The agency answers questions e-mailed to cccsofok@aol.com within 24 hours or on the next business day. Visit its Web site at tulsaworld.com/cccsofok .





Submit Action Line questions by calling 699-8888 or by e-mailing phil.mulkins@TulsaWorld.com or by mailing it to Tulsa World Action Line, PO Box 1770, Tulsa OK 74102-1770.




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