How to Get a Balance Off a Credit Report if a Car Was Repossessed

Getting behind on your car payments can be stressful, especially if the lender repossesses your vehicle. After the repossession, the lender will sell your vehicle for any amount that it can get, and then try to collect any remaining balance from you. Lenders may get aggressive in their collections attempts, using lawsuits and garnishments as allowed by law, but it will always list what you owe on your credit report. You can remove auto loan deficiency balances from a credit report with some effort by using a couple of different methods.

Instructions

Paying or Settling the Balance

1

Contact the creditor or collection agency that currently owns the debt. Let it know that you are interested in clearing the debt, and that you would like to work out a fair settlement for payment.

2

Negotiate with the lender or collection agency. Negotiate the lowest payoff price possible. Collectors may settle for lower amounts on older debts. When you reach a deal that is acceptable, have the lender or collection agency put the deal in writing. If possible, negotiate as part of the deal that the creditor will remove the collection entry from the report, but make sure that it will accept payment of the agreed-upon amount as settlement in full for the debt. Make sure that negotiations also specify how the debt will be listed with the collection agency, either as settled in full, or deleted from the report.

3

Mail a money order or bank check to the creditor with a copy of the letter you received stating the debt is settled in full. Attach a copy to the letter for your records, and keep these documents forever. This is important in case another collections agency attempts to collect the debt at any time in the future.

Filing for Chapter 7 Bankruptcy

4

Collect all of the necessary forms to file for bankruptcy. Consult with an online source for bankruptcy information, or consult with an attorney who specializes in bankruptcy.

5

Complete the bankruptcy forms as required. You will have to complete several different forms outlining all of your debt and assets, as well as your income. These forms also detail what your intentions are regarding debt and assets. Make sure that your car lender or the collection agency handling the account is listed as a creditor in the bankruptcy filing.

6

File the completed forms with the bankruptcy court for your area, and pay the necessary filing fee. The court will notify your creditors, and schedule a meeting that includes them, if they wish to appear. In about 90 days, if nobody disputes your bankruptcy, you will receive a discharge of all your debts, meaning that you do not have to pay them. With this discharge, the creditor must list the balance of the car loan as $0, or as included in bankruptcy. If it does not, you will need to dispute the entry with the credit bureau, and ask it to properly update the listing.