Legal Question in Credit and Debt Law in California
reposession
I entered intoa subprime car loan as a co-borrower since the primary borrow could not qualify on his own. The interest rate was 19 percent. Due to the economy and cut down in hours, the payments became too high and piled up. The car was repossessed one year ago and sold at auction. We paid for two years and did not fight the repossession because we couldn't afford it. We are now receiving notices that we still owe $17,000+ on a vehicle we no longer owe. The bank wrote it off and sold it to a collection agency. They are threatening to sue. The primary borrower was laid off from his job and I can't afford any payments at all since we have a pre-school age son and i am now the only earner. My questions are: what is the liklihood this will go to court and judge grant the collection agency to garnish my wages? i have no money left over each month after paying bills since the other borrower is laid off..how does affect any outcome? what is the lesser of two evils...wait it out and hope they don't sue or file bankruptcy? Any assistance would be greatly appreciated. Thank you!
2 Answers from Attorneys
Re: reposession
You might be a good candidate for a Chapter 13 bankruptcy. This would stop any lawsuits or garnishments, and you wouldn't have to repay the full $17,000. You might not have to repay very much at all.
Re: reposession
Your question is a complex one. With regard to the probability that the collection agency will sue, possibly. Each collection agency has different criteria when determining if they want to bring a lawsuit. In my experience, auto deficiencies carry on average a larger balance than the regular credit card collection suit. If you own property or have certain items on your credit report which would lead the collection agency to the conclusion that they would likely get paid if a suit was brought then they might sue. Even not withstanding your perceived assets a suit might still be brought. I have defended auto deficiency lawsuits on behalf of clients who are unemployed and have no real assets. It depends greatly on who the collection agency is.
Let's assume a collection suit is brought, what many consumers miss in defending these actions is Cal. Civ. Code � 2983.2 as an affirmative defense. As long as the auto loan was financed with the original finance company and not later refinanced this code section would apply. Strict compliance with all nine subsections must be met before a judgment is collectible. I have had numerous cases where the consumer admits to owing the money, even has made some payments, but wins the case because the finance company did not completely comply with the statute. Under Cal. Civ. Code �2983.8, no judgment may lie if the finance company does not follow the requirements. If you get served with a lawsuit discuss your options early with experienced counsel.
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