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Will Repossession Affect My Credit Report? February 14, 2018

Stuttgart, Arkansas
Will Repossession Affect My Credit Report?, Stuttgart, Arkansas

When financing a vehicle, the borrower agrees to use it as collateral in the event of default. As a result, those who are struggling to make payments on a car loan should explore the various options for regaining their financial footing as soon as possible. By filing Chapter 13 bankruptcy, for example, you may be able to catch up on payments and avoid repossession. Although bankruptcy will affect your credit score, so will repossession, and the former allows you to address other debts while the latter simply leaves you without a reliable way to work.

The Circumstances That Lead to Repossession

If your vehicle is at risk of being repossessed, your credit score has probably already taken a hit. A payment that is 30 days late will show up on your credit report for seven years. If you cannot catch up before 60 days has passed, there will be two marks on the report—one for being 30 days late and one for being 60 days late. Most lenders do not consider repossession until borrowers are delinquent by at least 60 days. By that point, though, the missed payments and defaulted loan will already be on your credit report. 

The Actual Repossession

bankruptcyOnce a car loan has entered default—which is technically 30 days after a missed payment—the lender has the right to repossess the vehicle. The precise terms regarding repossession are in the original loan agreement. For those who have a history of making on-time payments, the bank may provide some leeway. This could allow you to catch up on payments or declare bankruptcy. If you fail to do either before the bank repossesses the vehicle, it will be added to your credit report. The actual repossession can remain on the report for up to seven years from the date of delinquency.

Unfortunately, the financial impact of repossession does not end upon losing the vehicle. If the bank sells the vehicle for less than the loan amount, the original borrower must pay the difference, as well as any storage and towing fees. Failing to pay these charges will eventually send the account to collections, which will add another negative mark to your credit report for up to seven years.


If you have missed a car payment and fear repossession, declaring bankruptcy could be the answer. To discuss your financial situation with a seasoned attorney and determine the most strategic way to proceed, turn to Bueker Law Firm. Based in Stuttgart, AR, they are proud to help clients throughout the area get out of debt and obtain a fresh start. Visit their website to learn more about the legal counsel they provide or call (870) 673-1313 to talk to a lawyer today. 

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