Until you completely pay off the loan on your car, your lender is the legal owner of the car. If you are not able to repay the loan, one of the best ways out may be to surrender your car to the lender. If you stop making payments, the lender may repossess your car. However, in some situations, the lender chooses not to repossess the car.

This can happen in a situation where the cost to repossess, repair and resell the car is not worth it to the lender. This can be a frustrating situation, but there are a few things you may be able to do.

What happens when your lender refuses to repossess your car?

If you want to surrender the car (as is common in bankruptcy), it is possible that the lender refuses to take possession. In addition to cars and trucks, this can also happen with motorcycles, ATVs, jet skis and recreational vehicles. Enough people are surrendering these types of vehicles that the resale value can be low. If it is too low, the lender might not want to waste resources to repossess, refurbish and resell.

Lenders are not required by law to give you the title if you file bankruptcy and stop making payments, even after an unreasonable period of time and the lender does not repossess the vehicle. Until you’ve settled the matter, you will have to foot expenses such as registration and insurance.

3 options if your bank will not repo your vehicle

Here are a few options if your bank won’t repossess your vehicle.

Keep the vehicle and continue to use it

One day, the lender or some collection agency may determine it is worthwhile to pick up the vehicle. Until that happens, keep the vehicle registered and maintain proper insurance. You don’t want to compound the filing of bankruptcy with a post-bankruptcy car crash. Your liability in an accident will not be part of your bankruptcy case — in other words, it won’t be dischargeable.

With this option, you might be able to keep and drive the car for many more years without receiving the legal title to it.

Park the vehicle and mail in the keys

Another option is to park the vehicle in a secure, public location and send a copy of the keys via registered mail to the creditor. Again, you will want to keep your car insurance current until you confirm that the lender has repossessed the car. The risk for you here is that you will need to confirm that the car eventually was picked up by the proper entity.

There are also some practical issues if you pick this option. Specifically, many communities have strict rules about leaving cars on the street. You will need to visit and possibly move the car regularly. Each time you move it, contact the lender again.

Keep contacting the lender

Finally, you can continue to call the lender every 48 hours until you talk someone into picking up the vehicle. This will take a lot of persistence on your part, but eventually, it should get the lender to act. You can try to get a mailing address. Then you can mail a formal demand letter notifying them that their vehicle sits waiting to be picked up.

The bottom line

If you have a car that you’re no longer making payments on, the lender still is the legal owner. They have the ability to repossess the car, but in some cases they may choose not to do so. If you’re trying to move on, like from bankruptcy, it can be frustrating to have physical possession of a car that you don’t legally own and don’t want.

If you find yourself in that situation, it pays to be persistent. Keep trying to get the lender to pick up the vehicle. This might require numerous phone calls and a calm demeanor as you try to find the right person who can help you. In the meantime, keep the registration and insurance information current if you do continue driving it.