OneMain Financial is a well-known consumer finance company specializing in personal loans, particularly for individuals who may not qualify for traditional bank loans. If you have an auto loan through OneMain Financial, it’s important to understand their policies regarding vehicle repossession, especially if you encounter financial difficulties. It’s crucial to know how long before OneMain Financial will repo your car if you fall behind on payments.
Understanding Vehicle Repossession by OneMain Financial
When you secure an auto loan with OneMain Financial, your vehicle acts as collateral. This means that OneMain Financial has a legal right to repossess your car if you breach the loan agreement, primarily by missing payments. The exact timeframe before repossession can begin varies, influenced significantly by state laws and the specifics of your loan agreement.
In many states, OneMain Financial typically won’t initiate repossession until you are several months behind on your loan payments. This provides borrowers with some time to catch up or make alternative arrangements. However, it’s vital to recognize that the grace period can be shorter than you might expect, and accumulating late payments should never be seen as a viable strategy.
It’s extremely important to be aware of states with more stringent repossession laws. For example, in states like Mississippi, repossession can technically occur as soon as you are in default of the loan agreement. Default isn’t always defined as being months behind; it can sometimes be triggered by even a single missed payment or a failure to adhere to other loan terms. This means that even being late by a few days or owing only a late fee could potentially put your car at risk of repossession in such states.
What Happens After Your Car is Repossessed?
Vehicle repossession is a serious action with significant financial consequences. Once OneMain Financial repossesses your car, they will typically sell it, often through an auction. The proceeds from the sale are then applied to your outstanding loan balance.
However, the sale price of a repossessed vehicle is frequently lower than the amount you still owe on the loan. If the sale proceeds don’t cover the full balance, you may be held responsible for the deficiency balance. This is the remaining amount of the loan, plus repossession and sale expenses, that you still owe to OneMain Financial even after they’ve sold your car.
Furthermore, beyond the financial implications of the deficiency balance, repossession severely damages your credit score. A repossession will remain on your credit report for several years, making it significantly harder and more expensive to obtain credit in the future, whether for another vehicle, a home, or even a credit card.
Can OneMain Financial Sue You for the Loan Balance?
Yes, OneMain Financial retains the right to sue you to recover the outstanding loan balance if repossession and vehicle sale do not cover the full amount owed. If you fail to repay your loan as agreed, OneMain Financial can initiate a debt collection lawsuit against you.
The goal of such a lawsuit is to obtain a judgment against you. If OneMain Financial secures a judgment, they gain additional legal tools to recover the debt. One of the most impactful of these tools is wage garnishment. With a judgment, OneMain Financial can legally compel your employer to withhold a portion of your earnings to be directly paid to them until the debt is satisfied. This can significantly impact your immediate financial situation and ability to manage your living expenses.
Bankruptcy and OneMain Financial Auto Loans
If you are facing the threat of vehicle repossession or dealing with overwhelming debt from OneMain Financial, exploring bankruptcy options may provide a viable path forward. Bankruptcy is a legal process that can offer relief for individuals struggling with debt.
Chapter 13 bankruptcy can be particularly helpful if you want to keep your car but are behind on payments. Chapter 13 allows you to reorganize your debts into a repayment plan, often allowing you to catch up on missed auto loan payments over time while protecting your vehicle from repossession.
Alternatively, Chapter 7 bankruptcy is an option for those who may want to eliminate the debt entirely, even if it means surrendering the vehicle. Chapter 7 can discharge many types of debts, including auto loan debt, providing a fresh financial start.
It is crucial to understand that bankruptcy is a complex legal matter. If you are considering bankruptcy as a solution for managing your OneMain Financial auto loan or other debts, seeking advice from a qualified bankruptcy attorney is highly recommended to understand your rights and options.
