If I let a car go back voluntarily can the lendersue me for the negative equity?

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If I let a car go back voluntarily can the lendersue me for the negative equity?

Asked on January 31, 2011 under Bankruptcy Law, North Carolina

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Yes, it can.  When a car is repossessed, that does not wipe out the debt owed on the loan. Instead, whatever the car is sold for is applied against what you owe. If it doesn't cover the outstanding debt (and these sales almost never do because of additional interest and expenses) the lender can sue you for the remaining balance. If they win in court, they can attempt to seize assets, such as garnishing your wages try to garnish your wages or bank account(s).


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