What are my alternatives to repossession?

Full question:

I am a 76 year old woman who, because of a 'scam', found that I have a travel trailer on my credit report. I was a party to this so it is not the banks fault, I just did something foolish. Now I found the person who was involved and has paid on the trailer for 5-1/2 years is not going to pay any longer. I went to work a year ago and was able to keep up on the payments, however, my job ended and I cannot pay the payments. The principal has all been paid back to the bank but I am upside down on current value. I have someone who will buy it on a short sale (about 50% of what is owed) but the bank won't consider the offer and wants to repossess it if/when I no longer make the payments. At this time I am 5 days past the due date. If the bank takes it they will have to transport then sell at auction and will only get a few thousand dollars for it. They will then sue me for the difference which will, with costs, be approximately what I owe on the trailer now. I have a 1996 pickup, a mobile home on leased land as my only real assets. I am on a deed with my son on his house but I have no equity in it. (We did this because both of us are single and want the other not to have to go through probate, etc. if something were to happen to him). What can or should I do? I have an excellent credit rating and FICO score and hate to ruin those in the last years of my life, it is an honor thing. I just cannot have the bank take the trailer or place a lien om my residence nor have them involve my son's home. Should I transfer the ownership/title of the mobile home to one of my children (have tried to sell it and can't) or put it into a family trust. What other alternative can you suggest?

• Category: Debts and Credit
• Date: 04/07/2025
• State: California

Answer:

Ask your creditor about their willingness to work with you as you try to get your payments back on track. Prove a willingness to pay your debt by discussing the situation honestly and an ability to do so by getting new income or asking a friend for a loan. Inquire if the creditor can reconfigure your loan. Sometimes your missed payments can be added to the end of a new loan.

Whether you're already behind on your bills or worried you might fall behind soon, call your creditors. Explain your situation -- job loss, divorce, medical problems, or other troubles -- and ask for help. Suggest possible solutions such as a temporary reduction of your payments, skipping a few payments and tacking them on at the end of a loan, skipping a few payments and paying them off over a few months, dropping late fees and other charges, or even rewriting a loan.

If you need help negotiating with your creditors, consider contacting a nonprofit debt counseling organization. You can find a list of counseling agencies by location at the website of the U.S. Trustee, www.usdoj.gov/ust (select "Credit Counseling and Debtor Education.") The federal government has authorized the agencies on this list to provide counseling to debtors considering bankruptcy. However, don't pay anyone to "fix" your credit.

If you are far behind on your car payments and can't catch up, you may not be able to afford the car. One possibility is voluntarily "surrendering" your car before the dealer repossesses it. This saves on from paying repossession costs and attorneys' fees. Ask for concessions from the dealer before giving up the car. A dealer might waive its right to collect the amount left owing on the loan or promise not to report the default or repossession to credit bureaus.

In a voluntary repossession of a vehicle, a lender may sell the vehicle and try to collect any difference owed between the loan amount due and the sale price. The lender may also add on costs for towing, repossession, storage, late fees, auction, interest, reconditioning, and other costs. If the lender gets a judgment for these claimed losses and you are unable to pay, it it possible the lender may get a judgment lien on your assets, garnish wages, or attach bank accounts, in order to collect on the judgment.

Depending on the situation, a lender may consider one of the following:

Loan Workout: A loan workout modifies the original loan agreement. Some of these changes may include forbearance (e.g. forgiving a portion of the debt or late charges); deferment; renegotiating interest rate, monthly payment amount, principal amount, maturity date; or the enforcement an acceleration clause in the loan.

Deed in Lieu of Foreclosure: After the borrower is in default, the borrower voluntarily delivers title to the lender for consideration and the lender accepts the conveyance of the property in full satisfaction of the mortgage debt. Using this method, the lender saves the costs of foreclosure and the borrower avoids having a notice of default on his/her records. (Hamud v. Hawthorne, 52 Cal.2d 78 (1959).)

Short Sale: A short sale is a transaction in which a lender allows the real property securing the loan to be sold for less than the remaining mortgage amount due and accepts the proceeds as full payment of the loan. A lender may accept a short sale when the borrower is in severe financial straits and market conditions make a short sale the best choice to mitigate the lender's damages. Like a deed in lieu of foreclosure, this saves the lender the costs of foreclosure and the borrower avoids having a foreclosure on his or her credit report.

Short Payoff: With a short payoff, the lender accepts less than the remaining mortgage amount as full payment of the loan. The property need not be sold.