Legal Question in Credit and Debt Law in California
Repo and collection of balance
I voluntarily returned a vehicle because I could no longer afford to make the payment. I had attempted to quickly sell the vehicle, with no success. The bank sold the vehicle to the highest bidder, and that amount was far below fair market value. Now, a collections company has contacted me demanding nearly $10000 for the remaining balance. I am still in the same financial situation and can not make sizeable payments. Am I responsible for the amount, since they chose not to sell for the fair value? Can they attach wages? Can they place a lien on other property?
3 Answers from Attorneys
Re: Repo and collection of balance
You usually are responsible for the difference, but they'd have to get a judgment against you before they're able to attach your wages or lien your assets. If you can negotiate a lower amount before they sue, you'll probably be better off.
Re: Repo and collection of balance
The law does allow the secured lender to recover a deficiency judgment on a repossessed vehicle IF they follow the proper legal procedures in conducting the auction. However, they can't do anything to force you to pay without filing a lawsuit and getting a judgment against you. You might try sending the collection agency to demanding them to stop contacting you and demand validation of the debt under the Federal Fair Debt Collection Practices Act. If you are in extreme financial distress, you might consult a bankruptcy in your area before the new laws take effect October.
Re: Repo and collection of balance
Your contract probably states that you are responsible for the full amount of the loan, even if they repossess or you return the car to them. They will need to sue you in order to attach wages or file a lien on other property.
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