Bankruptcy for a Repossession

Are you considering filing bankruptcy on debt remaining after a vehicle repossession?  If you had your car or truck repossessed, chances are your car loan lender sold the vehicle for auction value, which is usually far less than the loan balance that you owed on the vehicle.  Under most vehicle loan agreements, your lender is allowed to sue you for the deficiency balance, which means the balance owing after your auto lender applies the auction sale proceeds to paying down your loan balance.

 

More and more these days, lawyers are seeing auto lenders in San Diego repossessing vehicles faster than they would in the past, then selling vehicles for extremely low-end auction value, then turning around and suing the borrower for a deficiency balance.  You would be even more prone to a lawsuit and judgment if your auto lender knows where you work, because they can just get a judgment against you and garnish your wages. 

 

For example, just the other day, a new client needed help dealing with a $40,000 deficiency balance.  He had a car loan for an expensive sports car.  The car was in an accident and was totaled and his insurance did not cover the difference between the value of the car and the loan balance.  He lost his car and ended up owing the finance company (auto lender) $40,000.  The client did not have an extra $40,000 just sitting around to hand to the car loan lender.  In such a case, eliminating the debt was a sensible, necessary and expedient solution to a difficult financial problem.

 

It seems that because of the state of the economy, lenders in San Diego are resorting to making money any way they can.  One such way is filing a lawsuit against borrowers to collect deficiency balances on loans that lenders used to simply write off.  If you receive a lawsuit for a repossessed vehicle, and you are overwhelmed by debt, your only option to stop a lawsuit and obtain debt relief may be to file bankruptcy on the repossession deficiency balance and obtain a fresh financial start.

 

You may not want to file bankruptcy solely for a repossession loan, especially if the deficiency balance amount is very small.  But if the deficiency balance is high, or of you have other debts that you need to eliminate, filing bankruptcy may be the best solution to help you become debt-free.

This entry was posted in Bankruptcy.


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