This text has undergone thorough fact-checking to ensure accuracy and reliability. All information presented is backed by verified sources and reputable data. By adhering to stringent fact-checking standards, we aim to provide you with reliable and trustworthy content. You can trust the information presented here to make informed decisions with confidence.
Auto loan charge-offs can drain resources, but selling them is a practical way for Tennessee dealers to recover funds and focus on performing loans. Here’s what you need to know:
Selling charge-offs can free up cash flow, but proper preparation and compliance are key. Let’s explore the details.
Tennessee dealers must comply with state regulations when handling charge-off sales. While the state aligns with federal guidelines, it specifically requires all debt collectors to have a state license before contacting Tennessee consumers.
For auto loan debt and written contracts, Tennessee law allows a six-year timeframe from the date of the last payment or contract signing to pursue collections. This six-year period directly impacts the value and collectibility of charge-offs.
| Debt Type | Statute Period | Governing Law |
|---|---|---|
| Auto Loans | 6 years | TCA 28-3-109 |
| Written Contracts | 6 years | TCA 28-3-109 |
| Judgments | 10 years | TCA 28-3-110 |
When selling charge-offs, Tennessee dealers must adhere to federal standards, including keeping accurate records of debt ownership, protecting consumer data under privacy laws, ensuring clear communication about debt status, and respecting consumer rights to debt validation.
With the state's bankruptcy rate at 11 filings per 100 residents, which is twice the national average, verifying account statuses before any sale is critical.
Motor vehicle dealers are expected to maintain thorough records for charge-off sales. According to the Tennessee Motor Vehicle Commission, the following are required:
"Any changes in address, ownership, employment, trade name, or vehicle line-make must be reported to the commission within 30 days." - Tennessee Motor Vehicle Commission Guidelines
With Tennessee's average auto loan debt at $5,230, having proper documentation is key to maintaining legal compliance and maximizing the value of charge-off sales. By meeting these requirements, dealers can confidently prepare charge-offs for sale.
Check the 'Tennessee Legal Requirements' section for the full list of required documents. Preparing charge-off files carefully is crucial for maintaining their value and meeting legal standards. Go through each charge-off account to ensure all documentation is complete - missing paperwork can significantly lower the portfolio's worth.
Sort files into these key categories:
This methodical organization ensures compliance and makes your portfolio more appealing to buyers. Well-prepared files also make it easier to set competitive prices.
Use recent sales data and current market trends to determine pricing. Typically, charge-offs sell for about 3 cents on the dollar.
Once pricing is set, digital platforms can simplify the selling process. These tools use your organized data to quickly connect you with the right buyers.
"AutoFi helps you alleviate the time spent working on deals, therefore you can focus more on other things, like dealing with customers, acquiring inventory, training your team, and working on things that help retain your employees."
- Michael Lucki, General Manager Riverhead Mazda
ChargeAfter has proven to be highly effective in automotive financing:
"ChargeAfter was a game-changer for us. We saw a 67% increase in financing applications with high and stable approval rates. It's clear that our customers love the flexibility and convenience that ChargeAfter provides."
- George Burt, Vice President of e-commerce & Omnichannel
These platforms make the entire process - from documentation to buyer matching - more streamlined and profitable for Tennessee dealers.
Once your charge-offs are ready for sale, the next step is to pinpoint the right buyers in Tennessee.
Tennessee's charge-off market features a variety of buyers, each with their own focus and strategy:
Major buyers in Tennessee assess portfolios based on factors like how recent the charge-offs are, the completeness of documentation, clarity of titles, portfolio size, and geographic focus.
Debexpert offers an online platform that connects Tennessee sellers with vetted buyers, providing several key benefits:
Using tools like Debexpert not only streamlines the selling process but also helps you stay compliant with Tennessee's regulations while tracking buyer interest in real time. This method enhances your overall sales strategy.
When wrapping up charge-off sales, you’ll need to decide between two main options: a one-time sale (transferring the entire portfolio at once) or a forward flow agreement (regular, scheduled sales). The choice often comes down to the portfolio’s size and whether you need steady, predictable cash flow.
Before finalizing a deal, it’s crucial to confirm the buyer’s credentials. Check their compliance with state licensing and federal regulations. Platforms like Debexpert can help you review important details, such as licensing, financial references, and past transaction history. Once the buyer’s credibility checks out, you can move forward with the documentation and transfer process.
Draft a sale agreement that clearly outlines key details - portfolio specifics, pricing, warranties, transfer schedules, and any post-sale responsibilities. Make sure to securely organize and transfer all necessary records, such as credit applications, payment histories, collection notes, and vehicle details. Complete any required filings or updates to records. Tools like Debexpert can simplify this process by offering secure file sharing, automated receipts, and audit trails, ensuring compliance with Tennessee’s data protection laws.
Here's a quick overview of the essential documents needed for compliant charge-off sales:
Once your documents are ready, you can kick off your digital sales process with confidence.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
.svg){kind=icon}
.svg){kind=icon}
.svg){kind=icon}
