Legal Question in Credit and Debt Law in Pennsylvania
car reposession
My fiance could not make the payments on his car last year so it was reposessed and auctioned. Now he is getting phone calls and getting letters in the mail from lawyers saying that he has to pay over a seven thousand difference or something like that which the auctioning didn't cover. This confuses us because if we could make the payments like that, we would still have the car. Why do they want him to make payments on a car that he isn't even driving? I want to know if this is something that actually needs to be paid or if someone is trying to get money out of us.
1 Answer from Attorneys
Re: car reposession
When a vehicle is repossessed the finance company has the duty to minimize its damages caused by the default in the contract. It does this by siezing the vehicle and eventually selling the vehicle. This is a fairly big business and the sales are accomplished via auction. These auctions are advertised and conducted according to laws set out by the state. The auction attempts to get the best price for a vehicle from those people or businesses in attendance at the auction.
When the vehicle is sold the money obtained is a set-off against the amount due on the original contract. In addition the contract allows for the recapture of costs associated with the repossession and sale. If the sale raises enough to cover the remaining amount due on the contract and the repossession costs then there is a wash and the debtor owes no more money.
Unfortunately, latey the used car market has taken a severe hit because of a number of factors. An auction on any particular day can be poorly attended, the car can have no interest or maybe the car was beat up. Whatever the cause the amount of the sale is less than the amount remaining due on the contract.
The auction only wiped out the part of the debt that the sale money covered. The remaining amount is still due on the contract. And that is what you see.
The first thing to do is to examine whether the auction and all the collection, sale and repossession fees are fair. If so then the amount claimed is fair and due the debtor is liable for the remainder of the debt.
You can try various methods to get rid of this debt, the most obvious is to pay the amount. If that is not possible then you can try to negotiate an amount that is affordable. If that is not possible then the debtor should examine bankruptcy. None of these should be done lightly and you should have the guidance of an attorney. An attorney can minimize the damage of any chosen method. If you pay off the amount you would hope the attorney could negotiate removal of the debt from a credit report. But be careful, and further payment on the debt starts the reporting statute of limitations running again.
If you need assistance with this or any other legal matter I would be happy to help you. You can contact me at [email protected] or at the phone listed with the LawGuru site.
Roger Traversa
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