Understanding Voluntary surrender and repossession 

^{Bromwich+Smith staff | Reading time: 3 minutes and 15 seconds | 617 words | Date: 2024/02/27}

Sometimes we need to part ways with a personal belonging to lessen a financial burden or pay off debt, and this can be extremely difficult. Often there are emotions tied to the item, our experiences and our unique situation, and they’re heightened because we’re already dealing with a stressful situation. In this blog, we will help by providing some insight to the process. 

There are several ways to surrender an item, each with its pros and cons.  Let's explore the difference between the two most widely used options: voluntary surrender and repossession. 

Voluntary surrender  

Voluntary surrender is when you willingly return property or an asset. Typically, this occurs when an individual is unable to meet their financial obligations tied to the item, which could happen during financial hardships including a job loss or other unexpected event. Most commonly this happens with property or vehicles, including automobiles, recreational vehicles and boats. This property can be delivered to either the lender or, in the case of insolvency, other authority designated by the administrator (e.g. Licensed Insolvency Trustee). 

What are the benefits to voluntary surrender? 

1. You remain in control of the timeline in which the item is surrendered.  
2. You stay in contact with the lender which allows for a positive resolution with them. 
3. You avoid additional costs that would occur during a repossession. 
4. While a voluntary surrender will still negatively impact your credit score it is typically have less impactful than a forced repossession. This could help you rebuild your credit faster in the long term. 

What are the cons to voluntary surrender? 

1. While less impactful than a repossession, a voluntary surrender will still have a negative effect on your immediate credit score. 
2. Once the asset has been surrendered your lender will have control over the liquidation which could potentially result in the item being sold at a lower price. This may result in a remaining balance left after the asset is sold and in some cases you may still have outstanding financial obligations to this lender.

Repossession 

A repossession occurs when the lender takes possession of the asset, without the individual’s consent, and due to nonpayment or breach of contract terms. This is usually a last resort after the lender has attempted to collect the outstanding debt from the individual.  

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What are the pros to repossession? 

1. Repossession allows the lender to gain control of the asset quickly which will reduce the risk of further depreciation or damage to the item.  
2. Lenders have the potential to resell the asset to recover the outstanding debt with the hope of reducing the financial loss to the individual.  

What are the cons to repossession?  

1. Repossession will have a severe negative impact on your credit score which may make it more difficult in the future to secure credit with favourable terms. 
2. Repossession may lead to legal action if the individual disputes it.  
3. During a repossession, the individual will have little control over the process. This includes the timing and location of where the item is repossessed as well as how the item is repossessed. This can lead to uncomfortable or embarrassing situations for the individual.  

The decision between voluntary surrender and repossession is not an easy one to make.  It is important to review all your options when facing financial difficulties and seek professional advice including that from a Licensed Insolvency Trustee who can help you make decisions that best suit your unique situation.   

Bromwich+Smith has a number of debt relief strategies to help you regain control of your finances and get your life back on track. Reach out today for a free, confidential, no obligation consultation. Bromwich+Smith’s Debt Relief Specialists are available by phone at  1-855-884-9243, Live Chat  or you can request a call back at contact us page. We want to see you flourish!