Can I Get Sued After A Repossession?

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Many people believe their auto loan is extinguished after their car is repossessed. This belief is inaccurate. After your car is repossessed, your lender likely will sell they car. If they sale is not enough to cover what’s owed on your loan, then your lender may sue to recover the difference.

In this post, we explain why repo lawsuits occur, the harm they cause, and some solutions that may be available for those getting sued for deficiency balances. Visit our repossession lawsuit page to learn how BCJ Law can help. You also can complete our contact form or call us at 1-800-997-5561 if you need assistance. 

Why do lenders sue after repossessing a car?

"[One] large subprime auto lender repossesses 35% of the cars it finances.'"

Repossessions are common, especially in the subprime auto finance market. For example, according to this article, a large subprime auto lender, repossesses 35% of the cars it finance. 

After a car is repossessed, it usually is sold. Once the sale occurs, the proceeds are used to pay repossession costs, and storage and auction fees. Sale proceeds then are applied to the remaining balance on the loan used to finance the vehicle, including principal, interest, late fees, and any other charges.

Repo lawsuits, referred to as “deficiency actions,” occur when auction proceeds can’t cover what’s left on the loan. So, if you owe $6000, but your car is sold for $4000, then you could get sued for the $2000 deficiency.

Repo lawsuits can be harmful.

"[L]enders may know the borrower won't be able to repay the loan ..., but it still may be profitable to make the loan [anyways]."

Lawsuits following a repossession can have a big impact on borrowers. For one thing, borrowers lose their cars, but still have to pay off their loans. There aren’t many (if any) other types of loans that operate this way.

Also, if you ignore a repossession lawsuit, your lender likely will get a default judgment against you. After that it can attempt to garnish your bank account or seize property. Thankfully, Pennsylvania doesn’t allow lenders to directly garnish your wages.

Apart from the financial woes that repo lawsuits can cause, another concern is that lenders are taking advantage of borrowers. According to a finance professor recently quoted in this article, “lenders may know the borrower won’t be able to repay the loan in the end, but it may still be profitable to make the loan due to high interest rates, fees, and the ease with which they can repossess the car in the case of default.”

What can I do if I get sued after my car is repossessed?

There are many ways to contest a repossession lawsuit. A brief explanation is provided below. For a more in-depth explanation, please visit our repossession lawsuit page

First, you can contest the case on the reasonableness of the repossession and the sale. If your lender improperly repo’d your car (breaching the peace is a classic example), it may not be able to sue you. And, if your lender improperly sold the car (failing to give proper notices is a common violation), it may not be able to get a deficiency.

Second, you can contest the case using court rules and procedure. Lenders must provide evidence to win cases. If they don’t have the evidence or can’t admit that evidence, then they should lose and you should win.

There are various other defenses to raise as well. For example, if the car was a dud to begin with, you may have a claim against the lender. You also may have a claim against the lender if it violated debt collection or other consumer protection laws.

Hire BCJ Law to help.

If you’re getting sued after your car was repossessed, please contact BCJ Law for help. We may be able to win your case or get you a positive monetary recovery. You can call us at 1-800-997-5561 or complete our contact form.

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