I have heard they sell the car at auction and you are then responsible for the difference. Yet people have told me that they just don’t pay the bank back, and it goes off your credit report in 7 years. What exactly will the bank do to retrieve what you owe? Can a lean be placed on your home, can they take you to court, etc?
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yes, yes, yes. b/c you filled out the papers and signed your name, they can do what it takes to get you to pay back what you owe.
It used to be if you filed bankruptcy then the 7 years came into play. I think, though, that bankruptcy laws changed a few years back and in your case, the bank will do whatever is in their power to get the money back. That may include putting lien on your home, taking you to court, etc.
The information you got is partially correct.
Here is what normally happens.
After the car is repossessed the bank will sell it at auction. If there is still a balance owed after the auction sale they will file a lawsuit against you.
You will obviously lose this lawsuit. If you don’t pay they have the right to garnish your wages to get their money.
Now all of this can happen but it doesn’t always. Maybe the lawsuit just isn’t worth the cost to pursue. These proceeding are expensive so it mught not be worth it for the bank.
In 7 years all credit records fall off your report. Good or bad. Nothing stays on your report more than 7 years. But if there is a court judgment against you that doesn’t go away. Ever.
My advice to you is to do everything possible to avoid the repossession. Sell the car, even if you have to take a lose. You are better off coming up with the balance after you sell the car then coming up with the balance after the bank repossesses the car and sells it at an auction.