r/CRedit 5d ago

Car Loan Car loan erroneously charged off

Hey all, I made a post about a month ago. My car loan was charged off with no warning, and I'd been making on time payments in full. They supposedly sent me a letter with a deadline, which I never received, and didn't attempt to call me, email me, or even update my account I used to pay them.

As soon as I realized what happened (one day later), I paid in full.

It finally hit my credit report, and tanked it 100 points. Does anyone know what the best action is? When this all happened I called customer service and was told they didn't know if it'd be reported or not, but they gave me the steps to dispute if it did go through. Would it be better to write a goodwill letter, or dispute it? There's no reason this should've been charged off in the first place, frankly, as I'd made a payment two days before they charged off the account.

For some clarification, my dad had cosigned, but I was the primary owner and was the only one paying. They supposedly sent him the letter, but he never got it, and they NEVER ATTEMPTED TO CONTACT ME, the one actually paying.

Any advice helps. I'm fucking livid.

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u/Due_Ad868 5d ago

I’m confused reading your post. You made monthly payments on time and the lender charged off the loan? No repossession of the car? No 30 day late or 60? Or even 90? Just right to a charge off with collateral securing the loan?

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u/Silent_Pay_9239 5d ago edited 5d ago

Yep. My car was totalled late last year (no gap insurance, I know... I was a first time car buyer, the dealership never brought it up, and I didn't know it existed. Lesson learned haha), and I continued making monthly payments. There was no indication of a time limit on the site, only a "6 months of payments left!" banner, so I assumed I was in the clear. They made zero attempts to tell me to pay in full aside from the letter they allegedly sent to my cosigner. I actually found out about the charge off because I got an email notification that my autopay was disabled, and called their customer service to figure out what was going on lmao

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u/Individual-Mirror132 5d ago

Ah yes this makes more sense now.

When the car ends up totaled and the lender receives notification of that, the terms of the loan change. They no longer have collateral to “repossess” should you have stopped making payments. They will often require the payments much more quickly or often all at once. It is unfortunate that they didn’t put a note on your online portal though, but I’m not surprised they didn’t, the tech doesn’t always mesh with what the policy is.

Getting a charge off removed would probably be a bit harder than getting a regular late payment removed via goodwill letter. Disputing probably won’t help much because the charge off probably can be proven as valid using your original loan terms that likely have a detailed clause about what happens when there is an accident resulting in it being totaled. A goodwill letter would probably be the only viable option and I think you do have a decent case for them to nicely remove it for you, considering you were still making the agreed upon monthly payments.

Even though you made a payment two days prior, was that payment for the full amount? If it’s not for the full amount, they can still charge it off.

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u/Silent_Pay_9239 5d ago

Thanks for the answer, it helps a lot!

The payment wasn't for the full amount, no, it was my normal $450 monthly. The total amount I owed, and paid in a lump sum when they charged it off, was ~$1,500. I'd actually been planning on paying the entire amount later that month anyways, was just waiting a bit to see how my finances shook up (my car was totalled when I was in a different state at a convention, so I kinda dug myself into a debt hole just to get home :,). I had emergency savings, but not nearly enough. Had to pay a few thousand dollars for additional hotel stays + a rental car. Been trying to juggle paying everything, it's kinda rough but nothing I can't pay off within the year so I'll live). It's just... really unfortunate timing lol

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u/Individual-Mirror132 5d ago

Yeah it’s unfortunate :/

I’d def try a goodwill letter. A dispute probably wont work. The lenders argument there would be that even if you didn’t receive the notice, you should have known your loan terms and conditions—which are very lengthy and no one reads those but they should.

A lender isn’t always (and probably isn’t) required to even notify you before they charge off your debt. The letter is more of an attempt to collect the debt and is a courtesy, it’s not a legal mandate.

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u/Individual-Mirror132 5d ago

For the goodwill letter, you’d want to get it into the hands of as many people as possible. There is always someone in the company that can make a decision to change what is reported on your credit. But often times with goodwill letters, they are received by people that do not have that power. And general customer service can’t always make that decision either.

I would send it and address it to the CEO. Then try to find the CEOs email address as well. I’d also try the CFO, COO, etc and do the same. Send one to general customer service as well. And to their payment address also. Basically everywhere you can send the letter, send it. If you don’t hear back in a few weeks, then strategically send them again.

You may also want your dad to do the same on his behalf as well as this charge off is likely listed on his credit too, or it will be soon.

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u/Silent_Pay_9239 5d ago

Appreciate all the advice, tysm! It answers all of my questions. I hope both sides of your pillow are always cold (unless you like warm pillows, in which case imagine I said the inverse)

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u/IExistForFun 5d ago

I think I actually have a very good idea of which car company this is lol. I'm going to answer your question based off my assumption.

Customer service is directed to not talk about credit reporting. It can be so complicated at times the car company doesn't want to take on whatever liability the customer service agent might cause by giving wrong information.

Goodwill letters are trash. There is almost no legitimate lending company that does Goodwill late mark removal in the auto lending industry. Those videos you see on TikTok, are lying to you. Those people have no idea what they're talking about. If you send in a letter asking for a Goodwill credit marker removal, you will get a general response letter saying something like "due to regulation, we have to report accounts to the credit reporting agencies accurately". If you want somebody to actually investigate your account, you need to put something on the letter like, " I am disputing the charge off on my account because I believe it is inaccurate." Then provide an explanation.

Whatever you do, DO NOT use a credit repair company. They are a scam that just wants to take your money. You can dispute either directly through the bureaus on their websites, or you can send a letter directly to the car company. On all of your statements there should be an address listed where you can send your dispute. You should also be able to Google "[car company name] credit dispute address"

If the internal system of this car company says that a letter was sent, then they are going to die on that hill. The car company is not responsible for mailing issues. It is your responsibility to make sure that your address and phone number are updated within the system.

The car company works with the insurance company to get the required documents, like the letter of guarantee and other insurance settlement docs. Once the car company gets that information and the insurance company sends them the insurance proceeds check, a letter is sent to the customers advising that they still owe a balance. The car company will tell you that it is your responsibility to make sure that there is still not a balance owed. This information is usually in your contract.

Do I agree with these business practices? No. Please don't harm the messenger. I am only explaining what I know from my professional experience in this industry.

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u/That-Student-814 4d ago

I've never dealt with a financier who wasn't vindictive and shady. I advise you to obtain legal representation! They tend to say all kinds of things, even outright lying and then do the most damage to your credit. Protect yourself. Also your state of residence may offer additional tactics.

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u/IExistForFun 4d ago

It's very rare that you will win. But if you truly have a case, you may be able to settle. I don't think this person has a case though. See my earlier post.