Question about repossession

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pgilbert

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Suppose one has a boat loan with $75K remaining. NADA value is $95K. Been trying to sell boat for 2 years with current asking price of $79K with no lookers. Considering just stopping payments and allowing repossession.

Aside from a hit to my credit score, what else would I be liable for to the lender?? Anyone out there ever done this??
 
That would depend somewhat on the note itself. If the bank takes the boat and fire sales it at $50K, you could still be liable for the $25k difference if the note contains a personal guarantee and many do. There could also be tax consequences on forgiveness of debt. The banks / finance companies are getting really strict on sending out those 1099's.
 
What about your honor and good word?
You presumably signed the note, agreed to make payments . . .
Subsequent value of boat is irrelevant, except that you may need to make up the difference.
Sorry if I offend, but this irresponsible attitude too often is overlooked and tacitly approved.
JHS
 
Tommy is right about the tax consequence. I've read that often banks taking big hits like this report it to the IRS and their loss is considered your gain and your gain is taxable.
 
It s one thing not to be able to make the payments due to unforeseen crisis but to simply stop paying because values have come come down is on the same level as owners not securing a boat before a storm hoping to collect insurance
 
One would think that before you signed for your loan, you would have thought about the "what if's"

I would sell the boat for 70K and pay balance out of pocket. Its cheaper to do that then to have a repo in the back of your head for the rest of your life.
 
quote:
Originally posted by JHS3750

What about your honor and good word?
You presumably signed the note, agreed to make payments . . .
Subsequent value of boat is irrelevant, except that you may need to make up the difference.
Sorry if I offend, but this irresponsible attitude too often is overlooked and tacitly approved.
JHS

Click to expand...


Boy do I have to agree with that statement.

The end reality is that the rest of us wind up paying that debt.

George
 
NADA is worthless. What are the asking prices on yachtworld (or similar) and how close are you to those? Better yet, your broker (if you're using one) or Boat US could give you an idea as well. I would do everything I could to avoid repossession. Good luck.
 
Asking prices on yachtworld is more worthless than NADA prices. If you want out of the boat, drop your price until it sells. A good, clean, and well maintained boat priced at slightly below market value should sell quickly. In my opinion, many owners are upside down and are looking for someone else to overpay so the owner walks away without any out of pocket expenses. Talk to a broker and get the value of what other boats of the same model, similiar year sold for. That's what I would list it at. Add up the costs of what it will be to hold onto it for a year. Subtract that from the asking price and that should give you the bottom line price to accept on an offer.
 
Phil - I would never walk away, first of all I think it's wrong as mentioned above, and on top of that I would fear the consequences. I'd expect once the boat is sold cheap, they'll come after me for the difference. One thing I'll say FWIW, is that if I recall your boat - which looks really nice BTW - has the composite drives. This might be a deal breaker for most buyers right off the bat, so I would address it upfront in your listing, and if the right fix has been applied (I think that was fix version #3 if I recall?) I would make that very clear.

I also think you mentioned in your listing thread that you were selling because you wanted to move up, in which case I'd seriously question walking away from this loan if you expect to get another!
 
The fact that you are even thinking of walking away says a lot!!!!!
 
A lot depends if this is a "dire straits" issue or not. If your finances are in trouble and you need to wind down in an emergency situation, then look at a repo. Even then if your boat loan is in trouble, is it just the tip of the financial iceberg? Get some good bankruptcy advice.

If on the other hand you just want out of the boat but otherwise you are financially sound. Go to a couple of local dealers and get a firm, committed price from them. Take the best one to the bank and tell them you want out. You may need cry poverty, but many will take the cash and refinance the shortfall. Usually they will design terms you can handle. This way you're out with your credit intact. They really don't want your boat, if you dump it on them, they will make your life as hard as possible.
 
quote:
Originally posted by JHS3750

What about your honor and good word?
You presumably signed the note, agreed to make payments . . .
Subsequent value of boat is irrelevant, except that you may need to make up the difference.
Sorry if I offend, but this irresponsible attitude too often is overlooked and tacitly approved.
JHS

Click to expand...

I agree 100%. You made a commitment, be a man (or a woman as the case may be) and take the consequences.

I know some people would not feel bad about cheating a bank out of their money, but you're really cheating the shareholders and they are individual people.

On the practical side, you are still responsible for the balance of the loan so you're better off selling it yourself than dealing with the bank selling it and the extra fees that might entail.
 
“Our character is what we do when we think no one is looking.” ~ H. Jackson Brown, Jr.
 
We are all witness to this very tough economy!
Money is really tight and I'm seeing boats that are going for pennies on the dollar. You know what I discover about Banks? Most of the time, you can sit down with them and make an arrangement. I know a guy in almost the same situation and he sold and owed a few thou. The bank gave him an easy payment and he was out from underneath....as they say.

TJ
 
There is no good outcome of a repossession. Only thing that changes is you don't have a boat any longer and your credit will be wrecked. The bank can still come after you for the money - and they will, forever - they have a lot more money and resources than you do. Don't think that it's over just because they have the boat. You will be paying for this forever - you need to try and work something out.

Imagine you own and rent a house - who are you going to work with, the guy who comes to you and says he can't pay his rent this month and wants to work something out, or the guy who just doesn't pay the rent with no explanation? One guy I might agree to 1/2 the rent for a few months, the other one I would just start working on an eviction and collecting my rent.
 
The bank does not want the boat and also the bank can not "firesale" it. They are required to market the boat properly and maintain it so it would sell for the most possible money. If they where to take the boat and than sell it quickly for pennies to than go after you for the deficiency they would have a very hard time convincing a judge they handled in good faith.
Talk to the bank and see if they will work with you on a short sale and try to get them to commit in writing to forgive the deficiency.

Cor
 
If you go the repo route, expected these added cost.

A. Cost of Bank selected attorney(s) to prepare all papers, letters, filings, etc.

B. Cost of Federal Marshall(s) to seize boat and serve papers.

C. Cost to move boat to safe harbor (as determined by Bank)and fees, dockage to maintain boat in "safe keeping" until sold.

D. Cost of a Marine Survey (as selected by bank) to document vessel condition when seized, to inventory equipment on board and to supply the bank with an "Estimated Market Value" on date vessel was seized.

E. Cost for bank to run a tile/document search for lien's or encumbrances. More attorney's fees.

F. Any marketing fees or advertising fees.

G. Broker's fees and any cost associated with the sale of the vessel.

H. Any miscellaneous cost or expense that the Bank can think to add.

I. Cost of any items missing/removed from boat. Cost of any repairs to outstanding hull/machinery damage.

J. Cost of a insurance policy to cover hull/machinery/liability while in the vessels is in possession of the bank.
 
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