Auto Repossession & Charge Off

Does a Repossession Affect the Amount of a Charge Off

Hi

Briefly, I am currently buying a new home, and just refinanced my existing home. My lender for the refi conditioned that we pay our debts - to be approved- we agreed as that was our plan anyway.

The problem comes into the fact that there was a charge off account from 3 years ago - that was included in the payoff - this was a vehicle that I had had and was subsequently repossessed.

The amount I owed at the time of repossession, looks to be the same amount that they are trying to get me to pay back.

Now if they retrieved the collateral, the van, then how can I be responsible for the full amount of the charge off? Also, this was not disclosed to me when I agreed to the terms of my refinance.

I don’t know if the agent just overlooked that item on my credit report or just didn’t know what to do with it.

Should I contact this lender with which I had the contract for the vehicle? I don’t know if they sold the van, or kept the van. The check is drafted to the vehicle lender- and it is significant (over 5,000). I can’t get my refi agent to call me back and let me know what’s going on!

Thanks!

Shay

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I would suggest you contact an attorney. I don’t know if the state you live in allows what is known as “deficiency” judgments.

If a car is repossessed the lender will immediately sell it at auction, usually for far less than what you owe on it. They then will seek a judgment for the remaining balance or deficiency.

Some states ban deficiency claims while others allow them.

In your case, you owed around $5000. The car was sold and the lender got something. That should reduce your outstanding balance.

The reason you need a lawyer is to determine, first, if the lender is allowed to collect on the deficiency; second, whether the sale was at arm’s length and the lender got at least the going wholesale price for your vehicle at the time of the sale; and third, to determine the actual amount legally due.

If, for example, the lender sold the van for $50 and it was worth at least a $1000 wholesale, the sale might be considered invalid, maybe wiping out the deficiency entirely.

The lawyer can also try to renegotiate the debt with the vehicle lender and also look into whether or not your current refinance lender violated any “predatory lending” practices.

When lenders change terms or conditions without notice or at the last moment, you might have a claim for damages. The lawyer can help you explore your rights.

Contact your local bar association's Lawyer Referral Service to get the names of attorneys qualified in consumer debt litigation.

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