American Recovery Service On Your Credit Report?

What is American Recovery Service?

American Recovery Service, Inc. is one of the largest and longest-established asset recovery and repossession companies in the US. Their primary function is the recovery of personal property subject to a default loan for creditors, including repossessions of cars, boats, motorcycles, RVs, etc.

Asset Recovery Specialists

Asset Recovery Specialists (ARS) provides large-scale national repossession services for the US. They are currently a fully Accredited Business with the Better Business Bureau and hold an A+ rating. ARS is not a traditional collection agency, they work in conjunction with banks, finance companies, and other lenders, recovering property for loans that have entered a default status.

When a borrower defaults, the lender files a recovery with ARS to find the asset. The item is repossessed, the asset is auctioned off, and the funds brought in from the sale are applied to the loan balance. The borrower may still be responsible for the deficiency balance which is the amount of the loan balance not covered by the sale price of the asset.

How Does Repossession Work?

When ARS is given a repossession charge, they locate the asset (car, boat, etc.) and take it back from the borrower. ARS retrieves assets as quickly and discreetly as possible. In fact, they can repossess an asset at any time with little to no warning and remove the asset from its public location, such as a driveway or parking lot, without  breaking the law.

Understanding the Repossession Process

ARS is also subject to state and federal laws such as the Fair Debt Collection Practices Act (FDCPA), which requires that ARS not engage in any conduct that is false, deceptive, misleading, or unfair in connection with the collection of a debt; that ARS not use any false, deceptive, or misleading representations or means in connection with the collection of a debt; and that ARS not harass, oppress, or abuse the debtor or any third person in connection with the collection of a debt. 

ARS cannot break into a home, trespass on private property, shout obscenities at debtors, cause public disturbances, or otherwise harass debtors. Rather, they must act in a lawful and non-confrontational manner by respecting the rights of the debtor.

It is important to understand that repossession does not extinguish the debt. Upon regaining possession of the asset, the creditor will usually seek to sell or auction the asset and recover the full amount of the loan. Most often, proceeds from the sale will be applied to reduce or pay off the borrower’s outstanding loan balance. The remaining balance that the sale proceeds do not cover (the deficiency balance) is also subject to further collection activity or legal action.

Repossession can be a devastating experience for the borrower, but it is also a contractual process with clear rules: in almost every jurisdiction, the repossessor must notify the borrower of the repossession and the debt behind it and must set out the conditions under which the asset can be reinstated. In most states, the borrower is allowed at least a few days to reinstate the asset by paying back the loan balance, along with repossession and storage costs before the item is forfeit.

If the repo is performed incorrectly or in violation of state or federal law, consumers can lodge a complaint and bring a lawsuit. If ARS has breached the peace, damaged property in the recovery process, or failed to provide the required paperwork, borrowers may file with the CFPB or fight back and defend their rights in court. Borrowers can also attempt to negotiate directly with lenders prior to repossession to potentially settle their account before a repo.

Legal Boundaries in Asset Recovery

When an asset, such as a car or a boat, is repossessed, it causes major damage to your credit. The creditor will report it to the credit bureaus and it will show up on your credit report for up to seven years. This negative mark will not only lower your score, but it will affect your ability to apply for future credit or loans. But repossession is not the only black mark that shows up on your credit report. Missed or late payments show up before repossession, and make things worse.

For many people facing a situation where repossession is a financial inevitability, there are still things they can do to reduce the damage. First, make sure the repossession is reported correctly. Check your credit report for errors that may include an incorrect balance or dates, and dispute those errors under the Fair Credit Reporting Act (FCRA).

If you choose to pay the debt or satisfy the debt in full, the negative entry can be removed, though this isn’t guaranteed. Alternatively, you can hire a credit repair company such as Credit Glory, which will search your credit report and flag inaccurate or unverifiable information. These companies can work with creditors to have repo or late-payment entries removed, which can help you rebuild your score more quickly. Proactivity here is key, whether it’s disputing inaccuracies or using a credit repair service to counteract the long-term damage to your financial health that repossession can cause.

What Happens to Repossessed Vehicles? 

Once they have repossessed an asset, ARS enters the remarketing phase, where the company works with creditors to sell the asset and recoup the remaining balance of the loan typically in the form of a property auction or online marketplace. Repossessed cars, boats, motorcycles, and other creditor collateral are most commonly sold to auction or directly to customers via programs such as ARS’s ARS2Market, which bills its asset-recovery service as "maximizing your asset’s resale value."

Some repossessed cars end up being sold at auto auctions, where buyers can purchase them at rock-bottom prices. Borrowers who want to stop their cars from going to auction can almost always reclaim them by paying off the entire loan balance, plus repossession and storage fees. You have to act fast, though. Your window of opportunity to get your vehicle back is quite small.

This knowledge is helpful for borrowers facing repossession of a vehicle because, even though repossessed vehicles are likely to be sold, a deficiency judgment can still be levied against a borrower who doesn’t know about the process and how to plan accordingly, whether trying to reclaim the vehicle or to settle the debt.

If you believe your rights have been violated, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) or lodge a complaint with your state’s Attorney General. A consumer rights lawyer or credit repair specialist such as Credit Glory  may also guide you through the process.

How to Prevent Repossession and Protect Your Assets

When facing repossession, many people feel helpless, as though the wheels are in motion and they have no control over what follows. But there’s a lot you can do to keep a car or other property out of the repossession process. If you’re late on payments on a loan, the first thing you should do is contact your lender. Most creditors are willing to work with you—they can set up a payment plan, change the terms of your loan, or put you into a hardship program that gives you a little time to get back on your feet and avoid repossession.

If you’ve already defaulted, act quickly before your loan is transferred to a debt-collection agency. You can request forbearance or deferment—which means putting off payments for a finite period of time until you can pay them.

You can also refinance. If you qualify for a lower rate or longer terms, you can pay down more of your payment into principal, thus reducing the amount of your payment and making your loan cheaper. Even with a lower payment, you will still wind up paying more interest over the life of the loan.

Alternatives to Repossession

If repossession is inevitable, you have an opportunity to negotiate with your lender and voluntarily surrender your vehicle. This saves them costs by not having to pay for repossession and storage, but it will still show up on your credit report. You’re getting a lesser of two evils. Instead of the lender strong-arming you into repossession, you get to deal with them on your terms.

If you’re worried about having your property repossessed again, then you may want to consider hiring a credit repair company like Credit Glory to help you get your score into good standing, renegotiate a settlement, and develop an infrastructure to pay your bills on time to avoid repossession in the future. Credit repair companies can also assist you in removing the black marks that brought your score down in the first place—such as repossession or a string of late payments—which will help you get better loan terms down the line.

If you can make a payment plan, refinance the loan, or surrender the asset voluntarily before the lender brings in the repossession crew, you will likely save yourself a great deal of expense and, perhaps, embarrassment. The best way to keep your goods is to be proactive with your lender and to keep your options and rights in mind.