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Voluntary repossession may also seem appealing to most debtors because it won’t directly cost them any money. Nevertheless, giving the property back will have the same effect on your credit as involuntary repossession and you may owe the lender money even after the property is turned in. If you do turn over your property you will still be responsible for paying your mortgage until the lender sells the property – so you will be liable for the costs associated with the money you originally borrowed plus the interest and arrears linked to it.
It makes sense to contact your lender when you know that you can no longer make payments. Most creditors will work with you if the believe that you will be able to pay soon. But if you cannot do anything else, try to sell the property yourself. Generally, you should only consent to Voluntary repossession in exchange for the creditor giving up some right such as if the creditor agrees not to report the default to the credit reporting agencies or if the creditor agrees to waive its right to seek the remaining balance owed.
There are certain things that need to be met in order for a repossession to be voluntary. This include the owner has contacted the creditor or been contacted by the creditor; owner has, during the above contact, agreed to freely give up the property to the Creditor or its designated agent; owner has provided clear, correct directions to the property; owner has provided an accurate description of the condition of the property; and the owner has left keys with a reliable person for the pick up of the property, if applicable.
Even so, do not agree to a Voluntary repossession without first seeking professional advice, there are generally much better options open to you. Voluntary repossession should really be viewed as a last resort, as it will make getting a mortgage in the future more difficult and won't make paying your existing mortgage any easier.
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