Many of my bankruptcy clients have had a car repossessed. Car repossession can be very expensive. Many times, a customer is left with a large bill from their lender even though they do not own the car any more. Bankruptcy can help in this situation.
When a car is repossessed by a lender, the car will be sold at auction. The price of the car at auction will be far less than the price of the car when it was new. Even though a repo seller must take “commercially reasonable” steps to get a fair price for the car, the price that these cars sell for is typically very, very low.
The lender will then bill the car owner for the difference between the price they got for the car and the outstanding balance of the loan. This is known as a “deficiency balance.” The bill typically also includes a lot of fees and penalties as well.
As you can see, car repossession will result in a large bill of many thousands of dollars. A person in this situation has to ask themselves why they should continue to pay for a car that they no longer own.
Like many consumer debts, a large deficiency balance from an auto repossession can end up in court in the form of a lawsuit. Lawsuits end in judgements, and judgements will end in bank levies, wage garnishments and liens on your property.
Chapter 7 bankruptcy will wipe out any car repossession deficiency balance. It will also wipe out the fees, interest and lawsuit costs that typically go along with a car repo. While Chapter 7 Bankruptcy might not be right for everyone with a car repossession, I have seen it really help people with car repossessions in their past.
If someone is demanding that you pay thousands for a car that has already been repossessed, please contact Attorney Rick Morin to discuss Chapter 7 Bankruptcy. He can be reached at the office at (916) 333-2222.