If a company repossesses my car can they charge me the full amount?

I had a car repossessed from me about a year and a half ago. I just got default entry papers that I have a few days to file an objection to. I’m wondering if the car company (financed through them) is allowed to charge me the full amount owed even though they took the vehicle and possibly made money off of it. Also, is it worth sending an objection although I know I owe them some sort of money? I just want to avoid my bank account being frozen or anything that happens from the defaulting. I would like to make payment arrangements. What should I write in the objection letter?

Asked on July 18, 2012 under Bankruptcy Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

When a car is repossessed, its value--what it is resold for--is applied against the amount you owe (though certain costs of repossession and sale are taken out first). Say you owed $10k remaining on the car, and that it was worth $7k when sold; you could be sued for the remaining $3k which was not covered or paid off by the car. However, they could NOT sell the car for $7k then sue you for $10k--they can only recover in total what the value of the loan, and any permitted costs were, and they can't turn a profit on this transaction.

If you are being sued for money therefore which you do  not believe you owe, you should consult with an attorney about what to do.

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