Q: My bank has listed online on my latest statement that they have written my car loan off as bad debt. When writing the
Loan off what now are my legal obligations to the loan and does the bank need to file a lien release on the vehicle?
A:
When a bank writes off your car loan as bad debt, it means the bank has deemed the debt unlikely to be collected and has removed it from their books. However, this does not absolve you of your responsibility to pay the loan. You are still legally obligated to repay the debt, and the bank or a collection agency can still pursue collection efforts against you.
Regarding the vehicle itself, if the loan is secured by your car, the bank typically holds a lien on the vehicle. Even if the loan is written off, the lien generally remains in place until the loan is fully repaid. The bank would need to file a lien release on the vehicle once the loan is paid off or settled according to the agreed terms.
It's important to communicate with your bank to understand the implications of the write-off and to discuss any options available to you, such as restructuring the loan or negotiating a settlement. Ignoring the situation can lead to further financial complications, such as negative impacts on your credit score or legal actions. Consider seeking advice from a financial advisor or legal counsel to better understand your rights and obligations.
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