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Auto Loans: Declaring Default and Accelerating The Debt
by Richard Insley, BOL Guru
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Question: What is the proper procedure to follow in regards to rewriting an auto loan due to the security being held as collateral for that loan being withheld by member/customer. We have contacted the member/customer on numerous occasions in regard to this matter.
Answer: Find the provisions in your note about "default" and read them to determine if the customer's uncooperative behavior gives you the right to declare a default and accelerate the debt. If so, contact the customer and advise that the loan is due in full and that failure to pay it off will cause you to turn the account over to a collection agency and report the default to the credit bureau. If this customer is a foot-dragger, but worth keeping, run this as a bluff--otherwise proceed with the plan outlined above.
First published on BankersOnline.com 09/2/02
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