My car was repossessed. Why do I still have missed payments?


Q. If I had a car repossessed and my credit report shows it’s charged off, why does the creditor report I missed a payment every month?
— Debtor

A. We’re sorry to hear of your money troubles.

Even if the lender took back the car, that’s not the end of your loan.

You may still have a remaining balance on the loan if the sales proceeds from your car aren’t enough to cover the amount you owe the lender plus the cost of repossession, said Charles Pawlik, a certified financial planner and chartered financial analyst with Beacon Trust in Morristown.

He said the “charge off” of the debt essentially occurs when the lender decides to claim the remaining uncollected loan balance as a business loss for accounting purposes.

“When a lender chooses to charge off the remaining balance of the loan, the debt does not disappear as a result,” he said. “You would still be legally liable for the outstanding debt regardless of the fact that it was charged-off.”

Pawlik said the lender can still directly continue collection efforts after the debt is charged off, or can choose to sell the uncollected debt to a debt collection agency.

“The debt collection agency will then continue efforts to recover the unpaid balance, and the debt may be passed between multiple collection agencies,” Pawlik said.

He said a charged-off debt will remain on your credit report for seven years from the date it was charged off.

“It is important to get in contact with the original lender or debt collection agency that is trying to collect the remaining debt to work on a plan to resolve the issue as soon as possible,” he said. “Once the debt is paid, you want to ensure that the creditor updates the account payment status to `paid charge off.’”

Once this is resolved, the negative effect on your credit will be less and less as time goes on.

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This story was originally published on June 14, 2019. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.