Legal Question in Credit and Debt Law in Virginia

Re: vehicle repossesion

Unfortunately, this is one of the biggest scams and outrages in the law. (Definitely write your Delegate and Senator in the General Assembly.) Whether it is a house or a car, it can be sold at an absurdly-low price, which is a complete joke. Then you will be responsible for the difference. So if you have a $12,000 loan on a car worth $15,000, the bank will sell the car for $1000 and expect you to pay the $11,000 difference on what was a $15,000 car.

If this were not under the law we would call that theft -- a crime. However, this is all perfectly legal.

In general, it is always better to sell your car if you cannot make the payments than to let it get repossessed. (In reality, you may not be able to complete the sale without a sign-off by the lender, which they will not give if there is an unpaid balance. However, what you should do is send a letter, by certified mail, saying "I have a buyer for $X willing and ready to buy the car and pay the loan off in full." Then if they ignore this and sue you in court, you will raise the defense called "mitigation of damages" which means that they could have gotten all their money back, and they refused to cooperate, so they caused their own losses. Technically, "mitigation of damages" is a very valid defense. "Mitigation of damages" requires the plaintiff to behave in a commercially-reasonable manner to hold down their losses. They can only collect AVOIDABLE losses. However, many judges have not heard these words in years and may not comprehend the idea. But it is defintiely worth trying.)

However, if you are asking this question I suspect that the car has already been repossessed. In that case, there is not much you can do. You should attack the formalities of the repossession to show that the car was not sold for its fair value, that you did not receive proper notices, etc., etc. You would probably need a lawyer to help you attack these details and formalities and show that the sale at auction was invalid or grossly unreasonable.

However, most judges will uphold the auction unless there is something grossly wrong with it, such as a required notice was sent to the wrong address (where you never lived) such as by leaving out the apartment number or something very clear.