Can a creditor sue for the remainder of a car loan, after they hadthe vehiclerepossessed?

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Can a creditor sue for the remainder of a car loan, after they hadthe vehiclerepossessed?

My daughter had a car repossessed about a year and a half ago. She just got served a summons stating that the loan agency is now suing for the balance of the loan plus interest etc. It was my understanding that they can sue for deficiency (balance after the vehicle is resold). According to the FTC site, they must sell it in a “reasonably commercial manner” and they are under a time limit to sell it. The paperwork they presented does not mention a sale. Where should she go from here?

Asked on November 30, 2010 under Bankruptcy Law, Arizona

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Is it possible that they did not sell the vehicle?  Generally speaking you are correct about what they may sue for after the sale of the vehicle but maybe it is still sitting out there on a lot somewhere.  I would also take a look at your loan agreement.  It will govern the manner in which the matter is handled along with state and federal law, if applicable.  I might take the paperwork to an attorney to review on a consultation basis.  Call your local bar association and see if they have any pro-bono clinics for debtors or a local law school perhaps that has a clinic program.  But you need to answer the suit and raise the issue of the deficiency rle as what is known as an "affirmative defense."  Good luck.


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