Auto Repossession Deficiency Lawsuit?

Auto Repossession Deficiency Lawsuit?

When your car is repossessed because you’ve defaulted on your loan, it doesn’t necessarily mean that your financial obligation ends there. Typically, the lender will sell the car to recoup some of the money still owed. If you still owe more that what they sell it for, you will have a deficiency balance.
 

Repossession:

When you default on your car loan, the lender has the right to repossess the vehicle. This means they can take the car back due to non-payment.  This may be a voluntary repossession or an involuntary repossession. 
 

Sale of the Vehicle:

After repossession, the lender will usually sell the car, often at an auction, to recover the unpaid portion of the loan.  If the proceeds at auction for the sale of your vehicle is less than what is owed on it, your lender may pursue you for a deficiency balance. 
 

Deficiency Balance:

If the sale amount of the car is less than what you owe on the loan (including the remaining loan balance, repossession costs, and related fees), you may be responsible for the difference, known as a “deficiency balance.
 

Deficiency Lawsuit: 

The Lender may bring a deficiency lawsuit against you when the balance owed on the vehicle is more than what the car sold for at auction after the repossession.  They may also sell the deficiency debt to a debt collector who may then sue you for the balance.
 

Deficiency Judgment:

If you lose your lawsuit you will end up with a deficiency Judgment. A deficiency judgment is a court order that a lender can obtain against a borrower when the sale of a property, typically following a foreclosure or repossession.
 
The judgment requires the borrower to pay the difference, or “deficiency,” between the sale proceeds and the balance owed on the debt.  Basically the car sold for less than what it was worth, so you owe the deficiency.
 

Legal Representation: 

If you are sued for a deficiency balance you should seek attorney representation to defend the lawsuit.  
 
Bankruptcy may also be an option to consider if you are facing a repossession deficiency lawsuit.  If you qualify for Chapter 7 Bankruptcy then the deficiency balance of the repossession would not be owed after you receive a discharge in Bankruptcy. 
 
If you find yourself with a repossession deficiency lawsuit in a jurisdiction that we practice in, contact us at Weston Legal.  We charge flat fees to defend debt collection lawsuits.

Free Consultation

Related Links

Table of Contents

Auto Reposession Lawsuit? We Can Help

We have Defendned Thousand of Collection Lawsuits. Here are our Fees.

Mike Weston is a seasoned debt lawsuit defense attorney and founder of Weston Legal. Since 2005, Mike has devoted his career to compassionately helping consumers struggling with issues involving their personal and business debts. Mike is grateful to have been able to help tens of thousands of clients become empowered with knowledge on the path to financial stability.