What are my son’s legal rights on a voluntary repossesion?

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What are my son’s legal rights on a voluntary repossesion?

My son is out of work for the last 6 months and there are no good leads yet. He wants to have his vehicle voluntarily repossessed and will work through repairing his credit later. The creditor who now has the loan refuses to pick up or even want the vehicle. He is insisting on getting his money from my son instead. My son cannot pay him anything because he has no money and is having a hard time finding a job. Vehicle is worth less than he owes.

Asked on October 19, 2011 under Bankruptcy Law, New Hampshire

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

The problem is, your son does not have a right to a voluntary repossesion. The loan or financing agreement between him and the dealer or lender gives the lender the right to full payment of the loan. The vehicle secures the loan and provides one way which the lender *may*, at its sole option or choice, try to recover some of the money owed to it in the event of a default, but the lender is not required to take the vehicle back, especially if its worth less than is owed; instead, the lender can hold the borrower (your son) accountable for the full amount owed to it and refuse to accept the vehicle. (And even if the lender did accept the vehicle, the most that would do is reduce what your son owes--e.g. if he owes $20k on the loan but the car sells for $13k at an auction after repossession, that $13k would be applied vs. what your son owes, and he'd still owe $7k more.)

If you are in a possession to assist your son with payments, or even to purchase the vehicle from him (essentially by taking over the loan) that might be the best can be done for him.


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