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Introduction
When a car is charged off, it means that the lender has written off the outstanding balance as uncollectible. This usually happens when the borrower has failed to make payments for an extended period of time, and the lender has exhausted all options to collect the debt. Many people wonder if they can keep a car that has been charged off. In this blog post, we will explore this question in detail and provide you with all the information you need to know.
What Does it Mean When a Car is Charged Off?
When a car is charged off, it means that the lender has given up on trying to collect the outstanding debt. This usually happens after several months of missed payments, and the lender has exhausted all options to recover the debt. The charged off account will show up on your credit report, and it will have a negative impact on your credit score. The lender may also send the debt to a collection agency to try and recover the outstanding balance.
Can You Keep a Car that has Been Charged Off?
The short answer is yes, you can keep a car that has been charged off. However, there are some things that you need to be aware of before you decide to keep the car.
Firstly, you need to understand that the lender still has a lien on the vehicle, which means that they have the right to repossess the car if you fail to make payments. This means that even though the debt has been charged off, you are still responsible for making payments on the car.
Secondly, if you do decide to keep the car, you will need to continue to maintain it and keep it insured. If the car is damaged or stolen, the lender may require you to repay the outstanding balance or face legal action.
What Happens if You Stop Making Payments?
If you stop making payments on a car that has been charged off, the lender may still repossess the car. The charged off debt does not release you from your obligation to make payments, and the lender may take legal action to recover the outstanding balance.
If the lender repossesses the car, they may sell it at an auction to recover some of the outstanding debt. If the sale price is lower than the outstanding balance, you may still be responsible for paying the difference.
Can You Sell a Car that has Been Charged Off?
If you want to sell a car that has been charged off, you will need to get the lender’s permission first. Since the lender still has a lien on the vehicle, they have the right to approve or deny any sale. If you do get approval to sell the car, you will need to use the proceeds to repay the outstanding balance.
If the sale price is lower than the outstanding balance, you may still be responsible for paying the difference. It’s also important to note that selling a car that has been charged off may be difficult, as potential buyers may be wary of purchasing a car with a charged off debt.
Conclusion
In conclusion, you can keep a car that has been charged off, but you need to be aware of the risks and responsibilities that come with it. The lender still has a lien on the vehicle, and they can repossess it if you fail to make payments. If you do decide to keep the car, you will need to continue to maintain it and keep it insured. If you stop making payments, the lender may take legal action to recover the outstanding balance. If you want to sell the car, you will need to get the lender’s permission and use the proceeds to repay the outstanding balance.
