Trying to settle a repo with GMAC.

[matthewscott]

After a job loss and getting into credit card debt trying to make ends meet, we had a voluntary repo in 2004. We have been making payments since then. We've probably paid about 75% of the deficiency. This was long before finding this site.

I've been wanting to just settle the account and just haven't had the courage to call and ask for a settlement. Fastfoward to this week.

So, I am sitting at work and I get a call from GMAC asking where my payment is. I replied, well, I paid it by the due date and you should have received it by now. She said oh I see it now and we did receive it but it just hasn't cleared yet. Ok, well not my problem. While I had her on the phone I asked her to not call me at work and I gave her a different number. Then I asked about possibly working out a settlement. She said ok, I'll talk to a supervisor and you can call back on Friday and I'll let me know the detail.

Today, I call back and after about 5 minutes, I finally get a hold of someone and then they tell me that she is out this afternoon. There wasn't much they could do without her being there. Ok, fine, she can call on Monday. Meanwhile, the lady on the phone kept asking well, how much money do you have? I simply told her that this was not how the conversation went and that the other lady was suppose to talk to a supervisor and I wasn't just going to agree to pay some random amount. So, I'm waiting until the girl can call me back Monday.

[jasen]

hahah.. yeah.

"How much to pay off the balance on this account?"

"How much do you have?"

It shouldn't take a supervisor or an act of god to get a payoff balance.

[swirlgirl]

If you feel confident that all of your previous payments have be credited properly and that the balance still due is correct, you could try offering to send them a reduced lump sum in order to close out the debt.

You could say that because of the economy, your financial situation in getting precarious and that you would just like to settle for XXX amount. You could possible pay it off with any tax refund you might get. JMO

[matthewscott]

hahah.. yeah.

"How much to pay off the balance on this account?"

"How much do you have?"

It shouldn't take a supervisor or an act of god to get a payoff balance.

That's what I thought. The new lady kept asking how much could I pay and that was what she needed to ask a supervisor. I explained that is not how the conversation went with the other lady and I wasn't going to agree to some random amount and that I would better off talking to the original lady who supposedly already talked to a supervisor.

If you feel confident that all of your previous payments have be credited properly and that the balance still due is correct, you could try offering to send them a reduced lump sum in order to close out the debt.

You could say that because of the economy, your financial situation in getting precarious and that you would just like to settle for XXX amount. You could possible pay it off with any tax refund you might get. JMO

Yeah, I think the payments have been credit properly. However, the deficiency was somewhere around $15k. I've always thought that was a little high. Of course we went for the zero percent interest instead of taking the rebates. Yet another mistake.

Anyway, yes, I agree that trying to reduce what is left and pay that in a lump sum is best. I'm suppose to hear back on Monday and I'll let you know what they say.

[matthewscott]

So, I'm waiting until the girl can call me back Monday.

I just tried calling them. They are closed today because of the MLK holiday.

I hope that once I do talk to them that I am confident on the phone. I have all of my questions and my ideal payoff written down. I just get nervous everytime I think about calling them.

[matthewscott]

I *finally* got in touch with the original girl that I started discussing the settlement with. After waiting about 30 minutes, they tell me that the best offer that they can do is $4600. I only owe $5740. I have paid them over $10K so far and I just don't think that is fair. I explained that it's a shame because I have saved up some money and I was hoping they would settle. I offered $2k.

I do have one question. Is there any point or reason to continue to pay them the $200 a month. It is with GMAC and not a JDB or other collection agency. It is an in-house collections department.

My wife thinks it will damage our credit more and that it will be turned over to a JDB/collection agency and my wages will be garnished. I just don't see the point in dealing with them anymore. Our credit report already has the repo/charged off account. Could it be worse?

What should I do next?

[Robert Nashville/Savannah]

I *finally* got in touch with the original girl that I started discussing the settlement with. After waiting about 30 minutes, they tell me that the best offer that they can do is $4600. I only owe $5740. I have paid them over $10K so far and I just don't think that is fair. I explained that it's a shame because I have saved up some money and I was hoping they would settle. I offered $2k.

I do have one question. Is there any point or reason to continue to pay them the $200 a month. It is with GMAC and not a JDB or other collection agency. It is an in-house collections department.

My wife thinks it will damage our credit more and that it will be turned over to a JDB/collection agency and my wages will be garnished. I just don't see the point in dealing with them anymore. Our credit report already has the repo/charged off account. Could it be worse?

What should I do next?

Ok...I'm not trying to be mean here and I appreciate that you've been paying all along and have paid a healthy sum but I'm not sure why you think they are being unfair?

There is certainly nothing wrong with trying to settle and get a bit of a break for paying a lump sum but after all, you do owe the money and GMAC has no obligation to expect less than what you promised to pay.

GMAC is pretty much holding all the cards here and their only real incentive to settle for a lesser amount is having a lump sum now rather all of it later...the financial benefit of that is relatively easy for them to calculate which is probably how they determined what they would settle for now...I don't think they are trying to either mean or unfair.

And yes, the benefit to continuing to pay them (aside from the fact that you owe it) is to keep them from suing you, getting a judgment and making your life miserable (while ultimately costing you more money than you currently owe).

Now...you can roll the dice, stop paying and either hope they don't sue or that they loose if they do sue but I wouldn't recommend that; at least not if you can continue to pay the $200/mo.

[matthewscott]

Right. I agree that I signed on the dotted line and that is what made me liable for the debt. That I get. That is the technical side of the situation. However, the way the economy is, both my situation and theirs, I don't understand why they wouldn't settle for something more reasonable. I guess I expected a lump sum of cold hard cash would speak louder and get a better settlement offer than just paying it off over time. I just want to get it behind me and move on. It's been something that has been dragging us down for quite some time now.

Honestly, it just feels like money down the drain every month. I don't have the car and my credit is already hit with the repo/charge off. Technically, I see your point but I think they have enough of my money.

As far as not being fair, I think it is more of them not wanting to forgive any of the debt. We shouldn't have been approved for the loan in the first place and they (or any of the three dealerships that we visited prior to the repo) did absolutely nothing to help us. I understand they didn't have to but why not help a customer out once in a while. Especially, after they got to write it off and still take my payments every month.

I guess I'm just angry at myself for getting into the situation in the first place and how bad it has been on us for years now.

Honestly though, how much worse could it get if I chose not to pay anymore?

[Robert Nashville/Savannah]

Right. I agree that I signed on the dotted line and that is what made me liable for the debt. That I get. That is the technical side of the situation. However, the way the economy is, both my situation and theirs, I don't understand why they wouldn't settle for something more reasonable.

I guess I expected a lump sum of cold hard cash would speak louder and get a better settlement offer than just paying it off over time. I just want to get it behind me and move on. It's been something that has been dragging us down for quite some time now....

So…what you want is a kinder, gentler GMAC!

One of the great pitfalls many consumers make is expecting a business entity to act like a person with feelings and emotions rather than like a business.

Sometimes you can reach a living, breathing, human being inside of a business who not only has a brain but a heart and the power within the business to exercise all three and show a little mercy (or at least a little common sense). However, the bigger the business the more difficult it is to reach someone like that.

Businesses simply don’t think or act like people…they do things based on equations and computer models and matrices that tell them how to act…how to respond.

That do the above for many reasons and one of them is simple survival…what is a HUGE issue for you (for example) is just one of thousands of issues just like yours that they have to deal with on any given day…they simply don’t have the time to give the kind of “human” customer service that customers tend to want (or need).

You also hit it right on the head when you said this is a technical issue…more appropriately, it’s a legal issue. You entered into a contract with GMAC to pay $X over a certain period of time…they really don’t care (more appropriately, the contract doesn’t care) if you still have the car or not or if you’re happy with the car nor whether you think they have enough of your money.

It may have been a bad financial deal for you to have made at the time or perhaps it just became a bad financial deal over time but that really isn’t GMAC’s fault nor does it help you any to feel frustrated at them for not seeing things the way you do.

Honestly though, how much worse could it get if I chose not to pay anymore?

Well, assuming they handled the repossession correctly (per your stat/UCC law), they shouldn’t have any real difficulty suing and winning a judgment against you for whatever the balance owed is plus very likely, attorney/other fees; so, you could wind up owing them $7 or $8K instead of $5K.

With a judgment in hand, they could likely attach your job income or bank accounts or any assets you may have (like a home/property), etc.

Judgments can hang around for years…even decades and be renewed and accumulate interest on the balance (all that depends on your state law regarding such thins of course).

Now, for someone with “nothing” (no income, no assets, an already lousy credit history/score) a judgment isn’t much of a big deal…for someone who does have income or assets, a judgment can make your life pretty miserable (not to mention really trash your credit history assuming there is anything there left to trash at that point).

I understand that times are tough. I also understand that there seems to be a general “wave” of emotion flowing over the country right now that consumers, for some reason, shouldn’t be held to the financial deals they make…they think the government should (or will) step in and “reset” the game clock so that they get a “do over”.

And unfortunately that seems to be where our country is heading.

I frankly think you are doing the RIGHT thing by paying this debt and I would encourage to keep doing so; at least unless you reach a point where you truly can’t pay…I know you would like a break and perhaps you do deserve one but don’t let the lack of one get you down or frustrated…there is a value in doing the right thing not only even if it’s difficult but especially if it’s difficult…that value isn’t something you can put a price tag on…it has to do with how you feel about yourself when you look in the mirror.

I do wish you well.

[matthewscott]

Ok, thanks for talking some sense into me. I do not want to make a bad situation worse. This has been a hard pill to swallow. Both now and over the past few years. It's unfortunate that I did go ahead and sign my name on the dotted line. I knew it was a bad decision from the start. I chose to not go with my gut instincts and that has been a hard lesson to learn.

If I was going to try to settle now, what do you think would be a reasonable offer that they would accept? I owed around 15k to start with and have paid over 10K. I think I owe 5740 now and they offered to settle for 4600.

I suppose that I could keep paying and then try to settle again later on.

If I ever do get a settlement out of them would that automatically result in a 1099? I guess that would be something to consider. I would assume the 1099 would be issued when the debt is settled vs. when it was charged off.

[Robert Nashville/Savannah]

Ok, thanks for talking some sense into me. I do not want to make a bad situation worse. This has been a hard pill to swallow. Both now and over the past few years. It's unfortunate that I did go ahead and sign my name on the dotted line. I knew it was a bad decision from the start. I chose to not go with my gut instincts and that has been a hard lesson to learn.

If I was going to try to settle now, what do you think would be a reasonable offer that they would accept? I owed around 15k to start with and have paid over 10K. I think I owe 5740 now and they offered to settle for 4600.

I suppose that I could keep paying and then try to settle again later on.

If I ever do get a settlement out of them would that automatically result in a 1099? I guess that would be something to consider. I would assume the 1099 would be issued when the debt is settled vs. when it was charged off.

I"m not an expert on 1099s but yes, I would expect they would issue one and I would think it would be based on the date the settlement occurred. Of course, we aren't talking about enough money to have that big of an impact on your overall tax situation.

I would think an offer of $4K might be accepted...they effectively offered you a 20% discount; a $4K settlement would be just a bit over 30% which isn't a bad deal for either of you.

Of course, you can't offer more than you have and if, for example, all you have is $2K then that's all you can offer...if they refuse, I'd try to save up whatever I could and make an new offer when you have a bit more to work with.

[misbhavn]

Matthewscott: I want to get clarification on something. You said you originally owed $15k and have paid off $10k. Was that $15k after they sold the car at auction or was that the original loan amount? The car was collateral for the loan and if they sold the car after repossession, wouldn't they be obligated to reduce the amount you owe by what they sold the collateral for?

[OMGWhatHaveIdone]

JT,

You are correct. Anytime a vehicle is repossessed - whether voluntarily or not, the lien holder must send proof of the auction/sale of the vehicle and the amount it was sold for, to the debtor that defaulted on the account. And they must deduct that amount from the defaulted loan. Of course, they add towing fees and repo fees etc, but they still need to subtract the amount the vehicle was sold for off the loan.

[misbhavn]

JT,

You are correct. Anytime a vehicle is repossessed - whether voluntarily or not, the lien holder must send proof of the auction/sale of the vehicle and the amount it was sold for, to the debtor that defaulted on the account. And they must deduct that amount from the defaulted loan. Of course, they add towing fees and repo fees etc, but they still need to subtract the amount the vehicle was sold for off the loan.

That is what I thought. After re-reading the original post, I believe that the $15k was after the collateral was sold. He mentions the "deficieny" several times.

[OMGWhatHaveIdone]

That's what I'm thinking too. You asked a great question and your instinct was on the money

[matthewscott]

That is what I thought. After re-reading the original post, I believe that the $15k was after the collateral was sold. He mentions the "deficieny" several times.

I don't remember exact figures. However it went something like this.

Vehicle was $38k. We made a few payments and then it was sold for 19k. That leaves a deficiency of 15k. We've paid around 10k so far. We owe 5740 now and they want 4600 to settle. Considering we've paid that much and that they got so little for the car I was hoping they would settle for less than 4600 but no such luck.

Hopefully, this clarifies the numbers.

[Robert Nashville/Savannah]

...Vehicle was $38k. We made a few payments and then it was sold for 19k. That leaves a deficiency of 15k...Considering we've paid that much and that they got so little for the car I was hoping they would settle for less than 4600 but no such luck.

Hence why a consumer should NEVER let a vehicle go through repossession if there is any way to avoid it because once the vehicle is repossessed; you loose all control of the process.

A vehicle sold at auction will NEVER bring what you can sell the vehicle for yourself; even if you still have to take a significant loss due to depreciation because you will at least be limiting the damage significantly.

At $38K; that vehicle was probably worth (in a private party sale) at least $24-$26K - selling it at that level would have allowed you to have had this paid off a while ago plus have avoided the impact of the repo on your credit history.

Not trying to beat you up here...it's just that I see this repo-spiral you've gone through happen to too many people; a situation that often could be avoided or at least mitigated.

[matthewscott]

Not trying to beat you up here...it's just that I see this repo-spiral you've gone through happen to too many people; a situation that often could be avoided or at least mitigated.

Yep, it's too late for me but maybe someone will read this thread and learn something from it.

[misbhavn]

Hence why a consumer should NEVER let a vehicle go through repossession if there is any way to avoid it because once the vehicle is repossessed; you loose all control of the process.

A vehicle sold at auction will NEVER bring what you can sell the vehicle for yourself; even if you still have to take a significant loss due to depreciation because you will at least be limiting the damage significantly.

At $38K; that vehicle was probably worth (in a private party sale) at least $24-$26K - selling it at that level would have allowed you to have had this paid off a while ago plus have avoided the impact of the repo on your credit history.

Not trying to beat you up here...it's just that I see this repo-spiral you've gone through happen to too many people; a situation that often could be avoided or at least mitigated.

Out of sheer curiosity, how would one avoid it if thay can't pay? You can't sell the car outright unless you can come up with the difference in cash to get a clear title. The next purchaser, or lienholder will require a clear title.

[Robert Nashville/Savannah]

Out of sheer curiosity, how would one avoid it if thay can't pay? You can't sell the car outright unless you can come up with the difference in cash to get a clear title. The next purchaser, or lienholder will require a clear title.

If the car is worth $26K in a private sale and you owe $35K then you go to your local bank or credit union and get a loan for the difference.

If your credit is shot; be prepared to explain and SHOW them how you can pay back the loan...ask for a little mercy...talk face-to-face.

Another option is to try and work with the current lien-holder and get them to accept accept a promissory note for the difference - if you can reach someone with a brain they will understand that doing so is a win-win all the way around because if they won't do it, you are going to owe them more money than you will with the deal you are offering plus they would have to do all the work or repossessing, selling, etc.

If that doesn't work, maybe you go to your family.

The point is...you try...you try until there is no place left to go because having the vehicle repossessed and sold at auction is the far worse outcome.

Of course, the ultimate cure to all this is to not buy things you can't pay cash for in the first place; especially an asset that drops in value like a rock in a pond.

[misbhavn]

Of course, the ultimate cure to all this is to not buy things you can't pay cash for in the first place; especially an asset that drops in value like a rock in a pond.

I hear ya! While I typically don't pay cash for my cars, I haven't bought a "new" car in over 10 years. I buy them a year or two old with low miles and still under the factory warranty. I let some other tool take that initial depreciation hit.

[matthewscott]

We couldn't reach an agreeable settlement at this time. I'm back to paying the $200 a month. Hopefully, I can try for a settlement again in the future.

[retmar]

I agree fully with Robert. And, yes, you are to be commended for how you are respsonding to this matter. You have stepped up, placed the blame where it should be (yes, we also agree that the dealership and lender should have looked a little closer). Always stand tall for this, no matter what.

My personal opinion is since you do not have the sufficient funds to even enter into a PIF for a lesser amount offer, you continue with the payments. Then, if possible, find a way to stash money to where after one more year, you can make an offer and more than likely get one that works. You say the monthly is $200, and the balance is $5700. This means that there is approximately 29 more months until you reach zero. By stashing for one year, and subtracting another year of payments, your payoff would be near $3300. You offer maybe $1500 and might be accepted. True, they may counter with a little more, but, being reasonable, you can find a happy medium to satisfy both. And, yes, you would be saving money in the end.