The issue of voluntary repossession has come up twice in the last two weeks.  The idea of a voluntary repossession seems like a good one.  You feel behind on your car payments for whatever reason and the bank tells you that you can turn in your car, or it will come take it.  Some people think they are doing the “right thing” by turning in their car.  However, fast forward six months, and the bank is suing them for a deficiency judgment.  This is when the bank can’t sell the car at auction for the amount you owed on your financing.  Bottom line, it is rarely a good idea to give back your vehicle in a voluntary repossession.

If you give up your vehicle, the only positive outcome will be less of a ding on your credit report.  Maybe this is enough to motivate your to give up your vehicle.  However, that little bit of positive to your credit report is almost never worth the inevitable lawsuit.  Let’s say you owe the bank $5,000.00 when you give up the vehicle.  The bank take the vehicle to the auction and sells it for $1,000.00.  Under Pennsylvania Law, the bank can now sue you for $4,000.00, the difference.  Defending you in this situation is possible, but hard.

If you force the bank to repossess the car, then you at least give yourself a chance to sue the bank for money.  Pennsylvania law provides you with a lot of protections during the repossession of your vehicle.  A majority of the time, the bank follows that law.  However, occasionally the bank does not and you can sue the bank for money damages.  As such, if you are going to lose your car anyway, why not give yourself a fighting chance by making the bank follow some very specific laws?

When your vehicle is repossessed, there can be no disturbance of the peace.  The tow truck driver cannot enter your garage, he can’t destroy your property, he can’t touch you in any way.  The bank has to send you a letter almost immediately after the repossession and that letter has to contain some really specific information.  If you voluntarily give up your vehicle, you lose ALL of these legal protections.

So, if you are considering a voluntary repossession, we suggest you don’t do it.  Make the bank work for it and maybe you will gain a legal cause of action in the process.