Lender Might Repossess Car After Non-Payment

Dear Experian,

I took out a loan for a van years ago and lost my job shortly afterwards. I only made two payments on it. The lender never came looking to take back the vehicle. This past week I received a letter from them stating that they want the van. What are my options? Can you help?


Dear GLM,

While it's unusual that a lender would wait this long before contacting you, the fact remains that you purchased a vehicle with a promise to make payments on the loan for that vehicle. The loan you signed for is a legal and binding contract, and if you haven't made the payments, the lender probably has the right to repossess the van.

You didn't mention whether the account currently appears on your credit reports. If reported, it would likely show the delinquent payments which were charged off to bad debt. If the account has been sold to a collection agency, that agency will likely report the debt as a collection account.

We do not provide legal advice, but if the van is repossessed you should perhaps check with an attorney about the amount you still owe and that could be collected from a collection agency. You may only be responsible for the amount of the loan which was not recovered by repossessing the van. However, the difference in the loan amount and the recovered amount may be considered income for which you would be required to pay taxes.

In any case, the original account and any collection accounts associated with it will be deleted from your credit history seven years from the delinquency date of the original debt.

Instead of placing the account for collection, the lender could file a civil lawsuit against you for collection of the debt. Civil judgments, which are debts you owe as a result of a court proceeding, can also appear in your credit report. Judgments remain seven years from the filing date.

Some states do have time limits on how long a creditor can attempt to collect a debt, so depending on where you live, that time frame might have expired. Check the Attorney General website for your state for specific information. There is no federal statute of limitations.

Thanks for asking.
The "Ask Experian" team