Rv repossession laws for seniors

Seniors With RV Payments They Can't Afford


By Eric Olsen, Executive Director, HELPS Nonprofit Law Firm

Recreational Vehicle (RV) loans last typically for 10-15 years and sometimes up to twenty years. Often a medical condition or simply a change in lifestyle makes the RV no longer necessary. Sometimes a high RV payment can become simply unaffordable. What are the solutions for seniors with an RV they no longer need or with an unaffordable RV payment?

If you have equity in your RV, meaning it is worth more than what is owed, you can sell it, pay off the loan, and pocket the difference. Or you can sell the RV for what it is worth and cover the difference owed to the bank, so the bank will release the title to the new purchaser. However, often more is owed on the vehicle than the amount it would sell for and many seniors can't afford to make up the difference. I have been an attorney for over forty years and am the Executive Director of HELPS, a national charitable nonprofit law firm that helps seniors maintain their financial independence. I will explain your options if you can no longer afford your RV payment and you can't sell the vehicle for enough money to pay off the loan.

You can simply stop making the payment. Having money for basic needs may outweigh the negative impact on your credit score. You can keep other credit or credit cards as long as they are not issued by the same lender who gave you the RV loan you are not going to pay.

Don't feel guilty if you can no longer afford to pay for your RV. This is a very common problem. The contract you signed contains provisions for a possible default and is one reason for the interest rate on the loan. If your RV payment is being taken from your checking account automatically, you can contact the lender to have the automatic payment stopped.You don't need to give a reason – you just want the automatic payment stopped.

You will eventually get a call from the lender about the missed payments. This is the best time to tell them that you can't afford the RV and they should collect it. You could try telling the lender earlier, but if you are current on your payments, it's difficult to get through to the right person. When you are in default, the person that calls will know what to do. The lender shouldn't bother you about the payment. Why? Because they don't know how much money you will eventually owe, if any. It will finally be picked up and sold by the lender, probably for less than the balance of the loan. After it is sold, you will receive a notice of the amount of money still owed or the "deficiency amount."

What happens when you get a deficiency notice? Our most important message for seniors is that federal law protects your Social Security, pension, disability, and VA income.The debt doesn't need to be paid. This income can't be garnished or taken from you – even if a creditor files a lawsuit and obtains a judgment. States also have exemptions laws that protect other property.

It is my experience that it is not common for seniors to be sued for a deficiency for an RV loan, perhaps because a collector realizes that a senior's income is protected.

Collectors will, however, make harassing phone calls and send threatening demand letters. They will never tell you that your income or property is protected. They use intimidation and threats to get a senior to pay.This unwanted collector contact can be stopped.When a person sends a collector what is called a "cease and desist" letter, a collector may no longer call or send demand letters to that person. A template is available on the HELPS website.

Seniors who owe money for a defaulted recreational vehicle loan often owe other debt as well.Many don't realize their income is protected and go without basic needs to pay debt they can't afford. A federal law called the Fair Debt Collection Practices Act provides that when a person is represented by an attorney, collectors may no longer call or send demand letters to that person.They can only communicate with that person's attorney.That is what HELPS does; we represent seniors nationwide in order to stop unwanted collector contact.

Seniors can stop making RV payments they no longer can afford, and they can be protected from collector harassment. Here is a link to a HELPS YouTube video where I explain in more detail why and how you can surrender an RV you can't afford.

If you have further questions please visit our website www.helpsishere.org or call HELPS toll-free 855 HELPS-US.No qualified senior is ever turned away.

If you want to reduce your interest payments and lower your debt, join MoneyTips and use our free Debt Optimizer tool.


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Sours: https://www.chron.com/business/moneytips/article/Seniors-With-RV-Payments-They-Can-t-Afford-13834569.php

What Happens When You Default on an RV Loan?

Avoiding Default

Defaulting on an RV loan has serious consequences. Besides losing your RV, your credit score is affected negatively, and you will most likely still owe the bank money. It is best to avoid defaulting on your RV loan. To avoid default, first contact the lender that holds the loan. According to TD Bank, “Time is of the essence” when trying to prevent a loan default. Call the lender as soon as you realize you are unable to make the loan payments. Ask for a loan modification or a short sale. For a loan modification, the lender defers payments and restructures the loan to bring you current and give you affordable payments. If a loan modification is not an option, a short sale may be. A short sale is useful when you owe more on the RV loan than the RV is worth. In a short sale, the lender agrees to accept a reduced pay off amount, which enables you to sell the RV at market value and still fully pay off the loan.

Repossession

If you are unable to make arrangements with the lender to prevent defaulting on your loan, the lender will repossess (take) your RV. Depending on your contract, repossession can happen as soon as one day after your payment is due. It is rare for a repossession to happen so soon, however. A repo person can take your RV without notifying you, but cannot break the law while doing so. For instance, if the RV is parked inside a private locked facility, the repo person cannot break into the building to gain access to the RV.

The Sale of the RV

After your RV is repossessed, expect to receive a letter in the mail from the lender notifying you of the repossession and your rights. For instance, you have the right to recover personal belongings that were inside your RV at the time of repossession. Check your state laws to determine the amount of time the lender is required to give you to pick up your personal belongings. Depending on your state, you may have the right to pay off the loan to get the RV back. The time you are given to recover the RV by paying off the loan is limited, however. Check with your state laws to determine the time frame. If you do not pay off the loan, the lender will sell the RV at an auction or privately. In some states, you have a right to attend the auction and bid on the RV.

Collection

The lender rarely sells the RV for anywhere near the loan amount, which leaves you still in debt. This is especially true when the RV is sold at an auction. In addition, the lender adds repossession fees onto the loan balance. After the sale, the lender deducts the RV sale price from the loan balance and repo fees to determine what you still owe. The lender will attempt to collect the remaining balance from you. If you used your home or another piece of property as security for the RV loan, the lender will place a lien on that property. The lender will also sue you in court for the remaining balance. With a court judgment against you, the lender can get the court’s permission to levy (take money from) your bank account and garnish your wages. The only ways to stop the bank levy and wage garnishment is to pay off the debt, ask the court for relief (available if your income is low enough), or file bankruptcy.

Credit

The repossession and lawsuit are reported to the credit bureau, which can seriously lower your credit score. A lawsuit remains on your credit file for 10 years. Future lenders will be less likely to offer you loans with a repo and judgment on your credit report.

References

Writer Bio

Rose Kivi has been a writer for more than 10 years. She has a background in the nursing field, wildlife rehabilitation and habitat conservation. Kivi has authored educational textbooks, patient health care pamphlets, animal husbandry guides, outdoor survival manuals and was a contributing writer for two books in the Uncle John’s Bathroom Reader Series.

Sours: https://pocketsense.com/what-happens-when-you-default-on-an-rv-loan-3887935.html
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RV Voluntary Repossession

You do not mention how old the RV is, whether it was purchased new or used, or if you have other unsecured debt (such as credit cards or student loans) and indicate your credit score is good. I assume you are current on your home payment and all other debts. However, any late payments, repossession, or bankruptcy will affect your credit score adversely. On top of this, you indicate you plan to divorce.

I see the following issues:

  1. RV as tax deduction
  2. Depreciation of RV
  3. Repossession
  4. Deficiency Balance
  5. Divorce
  6. Bankruptcy and Foreclosure

Recreation Vehicle Second Home

According to IRS Publication 936 a motor home (RV) may be considered a second home, which means that the interest on the loan is deductible on your federal tax return. Because tax laws change every year, it is prudent to discuss tax questions with a tax professional to ensure your assumptions about the tax code are current.

Implied in your question is whether the fact that the RV qualifies as a second home also qualifies it for some type of forgiveness of a deficiency balance. In other words, does an RV qualify for short sale or deed in lieu of foreclosure? If you can present your lien-holder with a solid offer, you may be to negotiate a favorable deal, one that is better than letting the RV go to auction. At auction, if it sells for a low price, you are on the hook for the deficiency balance. You may be able to get a higher price and leave yourself owing less, if you try to sell the RV.

Depreciation

Unless a person has a vehicle loan with an unusually brief repayment period, vehicles depreciate at a rate that is faster than a consumer can pay off the loan. RVs depreciate approximately 30% the moment they are driven off of the dealer's lot. They depreciate another 18% in year one, and 10 percent in year two. They continue to depreciate 5%-6% each year thereafter. Therefore, a buyer who borrows money to buy a vehicle should expect to be upside down for the duration of their loan. The same can be said for vehicle leases.

Repossession

Repossession is where a creditor holding the title to property (vehicle, boat, RV, and so forth) takes possession of the property from the debtor. See the Bills.com resource advise on voluntary repossession to learn more about what voluntary repossession is and the affects repossession has on your credit score.

If a borrower allows a repossession of their vehicle, the creditor will sell the vehicle at auction and apply the sale price to the balance of the loan. If the sale price is less than the balance, this is known as a deficiency balance. The borrower must pay the creditor the deficiency balance plus the cost of the repossession. All of this is spelled out in a loan contract and each state's laws.

You mentioned you live in Florida. In Florida, deficiency balances are governed under Title XL, Chapter 713, Real and Personal Property.

Deficiency Balance

A deficiency balance is an unsecured debt, much like credit card debt, medical bill, or a payday loan. As such, it can be resolved in a debt settlement program. See the Bills.com debt savings center to get no-cost quotes from pre-screened service providers.

Divorce and Debt

You did not mention if the RV loan is in one or both of your names. If it is in both of your names the creditor has the right to pursue the deficiency judgment against one or both signatories. A divorce decree is an agreement between two former spouses, but it is not binding on third-parties or modify existing contracts the parties share.

Bankruptcy or Foreclosure

You mentioned divorce. Couples splitting often sell their home to free the equity and extinguish the mortgage payments. You did not mention if you have equity in your primary home. If you do not, consider the Home Affordable Foreclosure Alternatives Program, which is preferable to foreclosure. Depending on the rest of your financial situation, you may wish to consider bankruptcy. Bills.com has numerous articles on bankruptcy that can help you decide if this is a wise option.

Recommendation

You have many issues to reconcile. Consult with an attorney in your state experienced in debt and divorce. Regarding the RV, consider refinancing your home to pay off the loan on the RV. Or, you may consider keeping the RV and determine its disposition as part of the divorce settlement. If at all possible avoid repossession or bankruptcy, as both will adversely affect your credit score.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

Sours: https://www.bills.com/debt/debt-management/get-a-loan/rv-voluntary-repossession

What To Do When You Have An RV Payment You Can't Afford

It is not uncommon that seniors find that they can no longer afford an expensive motorhome, fifth wheel, or other RV. Perhaps a husband or wife has become unable to use the RV because of age or illness, or maybe when retirement came, the decreased income meant RV payments became simply too expensive. An unaffordable RV is a common problem for many seniors. The good news is that seniors do not have to keep a RV they can no longer afford. The contract they signed has provisions for surrendering the RV. They do not need to feel guilty if they can no longer afford to pay for the RV and it must go back to the lender. This article will explain the process of surrendering an RV and why, in almost every case, the senior has nothing to worry about.

If you have equity in the RV, you can sell it yourself, pay off the loan, and pocket the difference. However, most of the time there isn’t enough equity to warrant selling it. But surrendering an RV is a simple process. If you can’t afford the payment, you can simply stop making payments. Call the bank or lender to stop an automatic deduction from your checking account, then call the lender and tell them that you can no longer afford to make payments. You can terminate insurance as long as you are no longer driving the motorhome.

However, you don’t have to call the lender. If you simply stop payments, they will eventually get the message and repossess the RV (sometimes lenders take a bit longer to repossess an RV than a car). After it is repossessed, the RV will be placed for auction or other type of sale. Normally, it will be sold for less than the sum owed. That difference is called a “deficiency.” You will eventually receive a notice of the amount of money still owed, or the “deficiency amount.” If that money is not paid, the lender could file a lawsuit for that sum to obtain a judgment, sometimes called a “deficiency judgment.”

The reason most seniors don’t need to worry about being sued for a deficiency judgment is their income is protected by federal law. Most seniors don’t understand that Social Security, pensions, disability and VA benefits are all protected from collectors under federal law. The income can’t be taken from you. So, for most seniors a judgment for a deficiency is meaningless. Almost all other assets seniors own, including cars and a home, are likely protected under state exemption laws. Here is a link to an article that explains this in more detail: Why your retirement income is protected.

However, collectors can make harassing collection calls and send demand letters. A collector will never tell a senior that they really can’t collect money or property from them. Instead, they will rely on intimidation. This can be very stressful, but it can be prevented. HELPS Nonprofit Law Firm is a national law firm that represents seniors in order to stop unwanted collector contact. Federal law provides when a person is represented by an attorney, collectors may no longer call or send lenders.

Often seniors who owe money on an old RV owe other debt as well. Because their income is protected, that income is available for their needs. The other old debts – including credit card debt – do not need to be paid. While bankruptcy is an option, it is often unnecessary because the senior’s income is protected already. Seniors simply need protection from collector harassment. That is what HELPS does.  

Seniors can stop making the RV payment they can no longer afford. And they can be protected from any collector harassment because of that decision. HELPS is a 501(c) law firm that operates in all 50 states. HELPS is a charity approved by the IRS. That means HELPS never turns any senior away who qualifies for our help. The cost is either free or extremely minimal, less than a cheap cup of coffee a day. Any senior can call HELPS toll free at 1855 435 7787 for answers to their questions about these matters or visit our website at www.helpsishere.org.

Learn More About Other Issues and What HELPS Can Do For You.

Sours: https://helpsishere.org/seniorswithrvpayments.html

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