How do I resolve the loan for a repossessed vehicle?

You didn't sell the vehicle, selling the vehicle involves transferring over the title.

his stopping the payments has nothing to do with your responsibility for the loan payments on the vehicle.

If you did set up a loan for him, it would have been an asset account and his payments would post to that account, and immediately be withdrawn to make the monthly payment, so the account would be at zero all the time.

If you did it some other way please explain

Let me clarify.  We owned the vehicle and was selling it to the employee.  He was making payments to us.  The balance of what he owed for the vehicle is still on our books but since we repossessed the vehicle he no longer owes us.  How do I get the balance of what he owed off the books since we now have possession of the vehicle?  We are not pursuing him for any amount owed.

---

@HWETN wrote:

Let me clarify.  We owned the vehicle and was selling it to the employee.  He was making payments to us.  The balance of what he owed for the vehicle is still on our books but since we repossessed the vehicle he no longer owes us.  How do I get the balance of what he owed off the books since we now have possession of the vehicle?  We are not pursuing him for any amount owed.

---

Ahh I see

When you sold him the vehicle, that vehicle should have been on the books as a fixed asset, and selling it removed it from the books, as well as removing its' accum depreciation account.

Create a new fixed asset account structure for the vehicle.

do a journal entry, debit the vehicle fixed asset account and credit the loan asset account for the balance in the loan asset account.