Account eligibility guide
Direct answer
Performing, delinquent, charged-off, repossessed, and bankruptcy accounts are not interchangeable. A buyer may consider one category, several categories in separate pools, or only accounts that fit stated eligibility rules. The fastest way to get a useful answer is to label every exception accurately and provide the records needed to understand what happened after the last successful payment.
What each status means to a buyer
| Account category | Primary review question | Important supporting information |
|---|---|---|
| Current or performing | Is the payment pattern durable? | Full payment history, next due date, seasoning, remaining term |
| Sub-performing or irregular | Are late or partial payments still producing collectible cash? | Transaction detail, extensions, promises, reversals, collector notes |
| Seriously delinquent | What is the most recent verified contact or payment, and what recovery paths remain? | Last payment, days past due, contact history, notices, collateral status |
| Charged off | Is the balance documented and legally collectible, and what has already occurred? | Charge-off date, balance components, prior placements, disputes, judgments |
| Repossession or deficiency | Where is the vehicle, was the process completed, and how was any deficiency calculated? | Repossession and sale records, notices, proceeds, expenses, remaining balance |
| Bankruptcy | What chapter, case status, plan treatment, claim status, and stay restrictions apply? | Case number, chapter, filing date, proof of claim, payment and counsel records |
Separate pools before requesting a price
Do not blend every status into a single average. Segment current accounts, early delinquency, serious delinquency, charge-offs, repossessions, and bankruptcy accounts. This lets the buyer apply the right servicing and recovery assumptions and prevents a small group of exceptions from obscuring the performance of the rest of the portfolio.
Use objective fields rather than labels alone: contractual due date, next due date, last successful payment date and amount, unpaid balance, days past due, charge-off date, repossession status, bankruptcy flag, and title or lien exceptions.
What helps performing accounts
- Several completed payment periods with consistent posting
- A clear reconciliation between the account ledger and the proposed sale balance
- A manageable remaining term and identifiable vehicle collateral
- Contracts, titles, liens, and modifications that match the system data
- Accurate contact information and payment histories
CAR Financial's published guidelines say it prefers about 90 days of aging, remaining terms of 24 months or less, accurate contact information, and pay histories. Preferred is not the same as a universal eligibility rule; submit the actual tape for review.
How late accounts are evaluated
Days past due is only a starting point. Buyers examine whether the customer has made recent partial payments, whether a payment was reversed, whether an extension changed the due date, whether contact information works, and whether the vehicle and lien remain identifiable. The CFPB's automobile finance examination procedures separately address payment processing, account maintenance, collections, restructuring, repossession, bankruptcy, information sharing, and privacy. A clean transfer must preserve those operational distinctions.
Repossession and deficiency accounts
A status of repossessed does not explain whether the vehicle has been recovered, sold, redeemed, reinstated, or is still assigned for recovery. Show the dates, notices, sale proceeds, recovery and sale expenses, and the calculation of any remaining deficiency. State law and contract requirements vary, so the buyer and each party's counsel should confirm the file before transfer.
Bankruptcy accounts require a separate review
Identify the chapter, case number, filing date, plan or claim treatment, payment history, and counsel or servicer handling the case. Do not treat an account in bankruptcy as an ordinary delinquency. Federal bankruptcy procedures include rules for the transfer of filed claims; the specific action depends on the case and transaction, so legal review belongs in diligence.
Protect customer information during the review
The FTC explains that lists identifying customers who financed vehicles can be customer information under the Safeguards Rule. Begin with the minimum de-identified information needed for pricing and move PII and source documents through an approved secure channel when diligence requires them. Continue protecting retained records even after a note is sold.
Frequently asked questions
Can a dealer sell only performing BHPH accounts?
Yes, a dealer can propose a selected performing pool. The buyer still confirms which accounts meet the final eligibility and documentation requirements.
Are delinquent accounts worthless?
No. Delinquency generally reduces expected collections and increases servicing work, but recent payments, collateral, documentation, and available recovery paths still matter.
Can bankruptcy accounts be included?
They may be reviewable, but they should be identified separately with case and claim information. The parties should obtain transaction-specific legal guidance before transfer.
Sources and related resources
- CAR Financial Services Account Bulk Purchase Program
- CFPB Automobile Finance Examination Procedures
- FTC Safeguards Rule FAQs for Automobile Dealers
- U.S. Courts Federal Rules of Bankruptcy Procedure — Rule 3001 transfer provisions
This guide explains a commercial review process and is not legal, tax, or accounting advice. Transaction requirements vary by agreement, account, and jurisdiction. Sources and software instructions were checked on September 26, 2026.