Families going through financial hardships have a lot on their plate. Student loans, medical debt and credit card debt starts to pile up and there’s barely room for anything else. Then the unthinkable happens, and your car is repossessed. It’s devastating enough that you now struggle with transportation. Necessary trips to school and the grocery store get that much harder.
To make matters worse, the lender who repossessed your car isn’t satisfied. Selling the car wasn’t enough to cover the entire balance of the loan, so they may decide to sue. What happens now?
Dealing with a deficiency balance
Having a car repossessed is not only inconvenient, but it can bring up further issues. A car deficiency happens when the sale of a vehicle doesn’t compensate for the loan that was used for purchase. Lenders are ruthless. With only one goal in mind, they will do what it takes to obtain full payment for a loan.
There are a few common defenses to a deficiency action. You could argue that the lender breached the peace, did not sell the car in a reasonable manner or waited too long to sue. If these options are not applicable to your situation, there’s other ways you may be able to get your car back, such as:
- Buying back the car. You may be able to buy back the vehicle.However, this means paying the entire loan balance, which might be too costly.
- Bid on the car. Your lender might sell the car at an auction. In this case, you could attend the auction and bid on the vehicle.
- File for Chapter 7 bankruptcy. The options above are often not financially wise or even possible. Instead, you may be eligible to file for Chapter 7 bankruptcy. If done before the sale, finalized bankruptcy might bar the lender from selling the car without permission from the court.