I want my car to be taken back. Why won’t they do it?

Until you pay off your car loan in full, your lender is the legal owner of the car. If you are unable to repay the loan, one of the best solutions may be to give your car to the lender. If you stop making payments, the lender can repossess your car. However, in some situations the lender chooses not to repossess the car.

This can happen in a situation where the cost of repossessing, repairing and reselling the car is not worth it to the lender. It can be a frustrating situation, but there are things you can do.

What happens when your lender refuses to repossess your car?

If you want to hand over the car (as is often the case in bankruptcy), the lender may refuse to take possession of it. In addition to cars and trucks, this can also occur with motorcycles, ATVs, jet skis, and recreational vehicles. Enough people are giving away these types of vehicles that the resale value is low. If it’s too low, the lender might not want to waste resources on repossessing, refurbishing, and reselling.

Lenders are not required by law to give you title if you file for bankruptcy and stop making payments, even after an unreasonable period of time and the lender does not repossess the vehicle. Until you have the matter sorted out, you will need to pay for expenses such as registration and insurance.

3 options if your bank does not reimburse your vehicle

Here are some options if your bank does not repossess your vehicle.

Keep the vehicle and continue to use it

One day, the lender or a collection agency may determine that it is worth recovering the vehicle. Until this happens, keep the vehicle registered and purchase appropriate insurance. You don’t want to make bankruptcy filing worse with a post-bankruptcy car accident. Your liability in the event of an accident will not be part of your bankruptcy case – in other words, it will not be dischargeable.

With this option, you may be able to keep and drive the car for many years without receiving legal title.

Park the vehicle and hand over the keys

Another option is to park the vehicle in a secure public place and send a copy of the keys by registered mail to the creditor. Again, you will want to keep your auto insurance up to date until you confirm that the lender has repossessed the car. The risk for you here is that you will have to confirm that the car has finally been collected by the appropriate entity.

There are also some practical issues if you choose this option. Specifically, many communities have strict rules about leaving cars on the streets. You will need to visit and possibly move the car regularly. Every time you move it, contact the lender again.

Continue to contact the lender

Finally, you can continue to call the lender every 48 hours until you talk to someone about picking up the vehicle. It will take a lot of persistence on your part, but ultimately it should get the lender to act. You can try to get a mailing address. Then you can send an official letter of formal notice informing them that their vehicle is waiting to be collected.

The bottom line

If you have a car that you no longer make payments for, the lender is still the legal owner. They have the option of repossessing the car, but in some cases they can choose not to. If you’re trying to move on, like after bankruptcy, it can be frustrating to have physical possession of a car that you don’t legally own and don’t want.

If you find yourself in this situation, it pays to be persistent. Keep trying to get the lender to collect the vehicle. It can take a lot of phone calls and calm demeanor as you try to find the right person who can help you. In the meantime, keep your registration and insurance information up to date if you continue to drive it.