Legal Question in Credit and Debt Law in North Carolina

It depends. If you live in North Carolina, the car loan was taken out in North Carolina and your employer is based in North Carolina, then no, they cannot garnish your wages. There is no wage garnishment in North Carolina for most debts (other than child support or monies owed for federal or state tax debt or other state debt).

However, there is wage garnishment allowed in Virginia. It may be that they made a mistake and just assumed that the law is the same in NC. It also depends on where your employer is located. If in Virginia, it may be that the creditor can get a judgment here, have it transferred to Virginia and then treated like a Virginia judgment so that your pay could be garnished in that instance. If, however, you are self-employed, then there is nothing that can be garnished no matter where you are located.

Letting your car get repo'd should be avoided. If you are having a tough time, have you considered bankruptcy? In a chapter 13, the terms of the loan could be modified. If you cannot do a chapter 13, then you can keep the car in a chapter 7 but you still need to find a way to pay for it so that is not an option unless you have other debts. However, the advantage of bankruptcy is that you can give the car back and be relieved of any further liability for the car debt.

If bankruptcy is not an option, you can allow a repo. To save them from adding collection costs, you might make arrangements to do a voluntary surrender if it will reduce collection costs because they will tack those costs onto the balance that you owe. So every dollar saved is one less dollar that you have to pay. The car is indeed sold at an auto auction and there is usually a deficiency as the car does not bring in an amount to satisfy the loan. Many things can be done between the time the car is sold and the entry of judgment to resolve the debt. It can be settled, but you have to start planning for that day now if you are going to go that route.

Is there any way that you could sell the car for at least what is owed? Or is the car worth infinitely less than the remaining balance on the loan? If you are close (between value of car and loan balance), you might want to try to sell the car and kick in enough to satisfy the balance.