When does a repossessed car have a deficiency balance?
When your lender has your car or other property repossessed, it sells the property, usually at auction. If the proceeds from the sale don’t cover the total of what you owe to the lender—they rarely do—you might be liable for the balance, called a “deficiency” or “deficiency balance.”
What happens if you are sued for a car loan deficiency?
If you are being sued for a car loan deficiency, do not ignore it. You still have an obligation to the lender for the deficient balance, even if you don’t have the vehicle. If you disregard a summons to appear in court, the case will proceed without you and a default judgment could be entered against you for the balance of the debt.
What can I do about wrongful repossession of car?
If you’d rather take the offensive, you can sue the lender for wrongful repossession. For large items, like cars, you’ll probably need a lawyer. But for smaller items, you can probably represent yourself in small claims court.
How to deal with a deficiency on an auto loan?
Dealing with an auto loan deficiency balance and debt collection A deficiency debt on an auto loan results from owing more on the loan than the car will fetch at auction after repossession or surrender. You have options.
Are there defenses to a car Repo deficiency lawsuit?
Below is a short description of the various defenses or claims that might be available to you. The loan papers you signed should describe when you are considered to be in default. For example, some loan agreements state that a debtor is not in default if less than 30 days late on a payment.
What happens if a car is repossessed for failure to make payments?
If your car has been repossessed for failure to make payments, the sale price of your car at auction may not cover the balance that you owe to the lender. If not, your lender can ask that a court enter a monetary judgment against you for the remaining balance on your loan, called a deficiency judgment.
How to pay a deficiency judgment after a repossession?
Negotiate a Payment Plan to Pay the Deficiency Even after a deficiency judgment is entered, your lender still may work out an agreeable payment plan with you. You can try to negotiate a payment by calling the lender or the lender’s attorney. Almost every lender’s attorney will take your call, and at least listen to payment offers that you make.
Can a car lender Sue you for a deficiency?
If a car lender sues you for a deficiency after repossessing your car, you might have some defenses to the lawsuit. When a creditor sues you for a deficiency judgment after it has repossessed your car, you might have defenses to that lawsuit or counterclaims that you can make against the creditor for damages of your own.
What happens if you don’t pay on a car repossession?
Some states restrict the lender’s ability to collect a under certain circumstances. Those circumstances rarely apply in car repossession cases though. If you don’t pay, the lender can sue you. If you don’t have a defense to the deficiency, the lender will get a judgment against you.
Can a lender collect a deficiency after a Reposession?
In most states, the lender can try to collect the deficiency from you. Some states restrict the lender’s ability to collect a deficiency under certain circumstances. Those circumstances rarely apply in car repossession cases, though.
What to do if your car is repossessed in Illinois?
· If by Illinois repossession law you find that the lender and/or the Illinois repossession company did not properly inform you via written notice of your rights and deadlines/fees, then you may have a claim against them. · Illinois repossession laws also protect you from the unreasonable sale of your repossessed vehicle at auction.
What to do if you owe a deficiency after a car Reposession?
You can pay the deficiency in full, make payment arrangements with the lender to pay the debt over time, or negotiate a settlement. In some cases, it might be best to do nothing; in others you might want to consider bankruptcy. Read on to learn about ways to handle a deficiency you owe after your car is repossessed. What’s a Deficiency?
What does it mean to have deficiency balance after repossession?
The National Consumer Law Center (NCLC) website is also a good source of information on consumer matters, including debt collection limitations during the coronavirus outbreak. If your car or other property is repossessed, you might still owe the lender money on the contract. The amount you owe is called the “deficiency” or “deficiency balance.”
What happens if I have a deficiency on my car loan?
For example, let’s say you still owe $20,000 on your auto loan and the lender sells or auctions the vehicle for $15,000. The deficiency amount that you are still required to pay would be $5,000. The lender may attempt to collect the deficient balance through a collection agency or collection law firm.