What to do if my daughter-in-law returned a car to the dealer who sold it at auction but then turned her over to collections?

UPDATED: Sep 11, 2011

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What to do if my daughter-in-law returned a car to the dealer who sold it at auction but then turned her over to collections?

He never gave her the chance to settle the debt nor did he contact her about the difference, between what was left owed and what he got at auction. He just turned her over to collections. Does she have any legal recourse?

Asked on September 11, 2011 under Bankruptcy Law, Tennessee


MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

She has legal recourse but very limited recourse. She should file a complaint with the agency who regulates this business -- usually the attorney general or department of financial institutions. Then, she needs to not make contact with the collections agency. Instead, she should dispute the claim through the credit reporting agencies reporting this debt. She needs to order her credit reports from the top three agencies, find out if both the loan and the collection is on there and dispute. Do not admit the debt to the collections agency because to do so would and can extend the statute of limitations. This is the statute of limitations the collections agency has to sue your daughter in law for the debt. While your daughter in law essentially did a voluntary repossession, she should know that theoretically, she would be held liable for any deficiencies in debt when the car sells (at auction or otherwise).

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