If a car is repossessed are you still liable for any money due?
Question Details:
Husband's job closed. He had no job for over 3 months. Loan company refused to work with him regarding car payments. He fell behind by about 3 months; they repossessed the car and quickly resold it. Now they want him to pay around $10,000 for a car he no longer has. Is he liable for this amount?
If he financed the vehicle, then he would be liable under the terms of the finance agreement. You should carefully review the finance agreement to understand the teerms of liability. If you do not have a copy of the agreement you can request a duplicate copy from the finance company.
If your husband defaulted on the loan and the vehicle was repossessed, the repo company would then need to auction the vehicle Whatever price the vehicle was sold for should be used to offset the balance owed on the loan. You should demand a complete accounting and itemization from the finance company in order to determine what amount, if any, is still owed.
If there are numerous debts which are not being paid, you may wish to consult with a bankruptcy attorney for further advice. The bankruptcy attorney can assist you in restructuring and/or eliminating your debts. A bankruptcy filing would also eliminate any harassing calls from debt collectors.
He may be liable. If the car was bought on financing, then your husband was liable for the full amount of the loan that he signed for. When the car is repossed and sold, the amount received for it is offset against the balance of the loan. However, since cars depreciate and this is a bad market for cars anyway, a car could easily be sold for substantially less than the balance of the loan, in which case your husband would then be liable for the remaining balance after applying the sale price.
You can and should ask them to document how they get to $10,000: i.e. the loan was still $X; the car sold for $Y; $X - $Y = $10,000. Then check to make sure they calculated properly, but assuming they did, your husband is probably liable for the amount.
