How to Settle a Charged-Off Repo Debt

For a variety of reasons, people can get in over their heads when it comes to car loans. And if they can't keep up with the payments, the lender will often repossess the card and sell it at auction in order to settle the debt.

That's not always the end of the matter for the original borrower, however. If the lender does not sell the vehicle for enough to cover the loan, they can come after the original purchaser for the difference.

Instructions

How to Settle a Charged-Off Repo Debt

1

Obtain copies of your credit reports from the three major credit bureaus. U.S. citizens are eligible to receive a free copy of their credit each year from the three major credit bureaus. You can find instructions on how to obtain these by visiting www.annualcreditreport.com.

2

Find out how much you owe on the charged-off repossession and who currently holds the debt. That information will be listed on your credit report or in correspondence you may have received concerning collection of the amount owed. In most cases, the original debt holder will have sold off the account to a collection agency. The collection agency most likely purchased the account for pennies on the dollar, and the older the debt, the more likely the agency will be to settle.

3

Offer to settle the debt for a lump-sum payment. If you owe $1,000 on the charged-off repossession debt, offer the collection agency an immediate payment of $500 in return for marking the account as paid in full and removing it from your credit report. If the collection agency agrees to settle for less than the full amount, get a copy of the agreement in writing before sending them any money. Pay by money order or cashier's check, and never give the collection agency electronic access to your checking or savings account.

4

If you can't come up with a lump-sum payment, offer to make a series of monthly payments. Don't be afraid to negotiate. Again, get any agreement in writing before sending money, and never give the collection agency electronic access to your checking or savings account.