Cleaning Up the Repossession

Lindsey has a repossession on her credit report from seven years ago. She's never been contacted about it and wants to know how to clean it up. Dave helps her with some ideas to settle this debt.

QUESTION: Lindsey in Buffalo has a repossession on her credit report from seven years ago. She’s never been contacted about it and wants to know how to clean it up. Dave helps her with some ideas to settle this debt.

ANSWER: If you want to settle with them, you need some cash saved up, and you don’t need a lawyer to do that. You can just call them. You can probably settle it for 10 to 20 cents on the dollar. If the balance was $13,000, then $2,000 to $5,000 should get rid of it.

They are going to go after you because they knew the other guy wasn’t going to pay. That’s why they wanted a co-signer. They were not shocked when there was a repossession. Just call them up and say the situation is still the same, but you have $2,000 now and you’d like to settle your part of this debt.

They are welcome to chase the other person to the ends of the earth, and you might even give the collectors their phone number. But you want to settle your part of this debt. If they send it in writing that $2,000 settles your part of the debt, you can send them a cashier’s check tomorrow.

Don’t give them any money until you get it in writing, and expect to argue with them for about a month once you start this. They will say very stupid things like they are getting ready to sue you. Yeah, right! After five years, they’re going to sue you because you called them?! No! If they were going to sue you, they’d just do it and then you’d hear from them.

But they’ll act like your file was really close to the top and they were about to get to you, which is a bunch of crud. Don’t fall for that. Just argue with them and don’t be intimidated. Tell them your financial counselor said these repossession deficits can be settled for 20 cents on the dollar and that’s all I have. If you want that, you can have it, because it’s all I have.

But I wouldn’t worry about it until then, and I sure wouldn’t call them until I’ve saved some money. If they sued you, you would get a notice of that. They don’t have to, but they will. And they’ll often harass you at length before they get to that point. If they do pop up to garnish your wages, offer them the settlement on that. You don’t have to settle on just that.