How to Settle a Repo Car Debt for Less With GMAC

How to Settle a Repo Car Debt for Less With GMAC
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Owning a car is part of the American dream; unfortunately, for many consumers that dream quickly becomes a nightmare once they’re unable to make their car payment. Lenders will accept a late payment or two but beyond that, repossession is usually the next step. Ironically, turning the car over to the lender, either voluntarily or involuntarily, results in a deficiency debt, which is the difference between what the lender sells the car for and the amount you owe on it. If your lender is GMAC, they will usually settle this debt for a lesser amount if you make them the right offer.

Learn your rights. Repossession laws vary from state to state, and they determine the responsibilities of both you and GMAC. In California, if the lender doesn't send you proper documentation after a repossession, your debt for that vehicle is extinguished. In 2003, plaintiffs in California sued GMAC for violating this law and they won.

Obtain a copy of the deficiency notice. The document should tell you the amount that you currently owe. If you haven't received it, call GMAC and request them to send it via fax or mail. Do not accept as fact any verbal amounts given to you over the phone without written confirmation.

Compare the deficiency total to your loan documents to ensure the amount sounds reasonable. It should be lower than the loan balance of the car and not higher. Remember, deficiency is what's left over after the lender has sold the car and partially recouped some of its costs.

Determine the highest payoff amount that you can afford based upon the deficiency balance. Your offer should constitute at least 50 percent of the deficiency balance, which indicates a good faith effort on your part to honor your obligation. If your offer is too low, it will be rejected.

Call the GMAC number listed on your deficiency document and ask for a settlement. Tell them you're willing to make an immediate payment and ask if they will accept that amount as payment in full for the total balance. Be firm but polite.

Request that GMAC send written confirmation of the agreed upon amount. After you receive this documentation, send payment via certified mail, return receipt requested. Your goal here is to prove that you made the payment and that they actually received it.

Make a copy of all payment and postal receipts. You must keep these records indefinitely because in the unlikely event that a collection agency comes after you in the future, you'll have proof that this debt was settled and paid in full.

Check your credit report to ensure that GMAC updates your account status as paid. If they have not updated this information within one month from the date they received your payment, initiate a dispute to have this data corrected with all three credit bureaus: Experian, Equifax and Transunion.


  • Contact an attorney if you believe a lender has violated your rights. You may be entitled to compensation or a reduction in the amount of money you owe.


  • Never make a settlement payment over the phone prior to receiving written confirmation of the agreed upon amount. If you do, the lender may say it's a payment towards the amount that you already owe and not a settlement of the debt in full; thus, they will still hold you responsible for the outstanding balance.