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What happens if my car loan is charged off?
What does it mean for me if my car loan is charged off? Will I still have to pay it off, or does it erase the debt?
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
I’m sorry to hear that you’re having issues with your
car loan
! Unfortunately, you’ll still need to make payments, even if your car loan is charged off. The only way you’ll be able to stop making payments is if you declare bankruptcy on your loan.When a loan is charged off, the original lender stops collecting payments and sends the debt to a debt collection agency. Usually, this happens if you miss several months in a row, typically 120 days. If you’ve just missed one or two payments, you won’t need to worry about a charge off yet.
If your loan is charged off, it will stay on your credit report for seven years. Additionally, the debt collection agency may file a lawsuit. If they are successful, you may be subject to a wage garnishment to help pay off your debt. If you’re concerned about the possibility of a lawsuit, it’s a good idea to get a lawyer to help you assess the situation.
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Jerry
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