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Defenses to Car Repossession Deficiency Judgments


In any situation where there is property that properly and legally secures a debt, that property can be taken and sold to satisfy the debt if the debt isn’t paid. This is the rationale behind foreclosure: the bank sells your house at public auction and then uses those funds to pay the debt. If the funds do not fully pay the debt, you could be on the hook to pay whatever the sale proceeds do not pay. This is called a deficiency.

Car Repossessions and Deficiencies

The same logic applies to cars and car loans. In most cases, unlike foreclosures, a car repossession can happen without an actual lawsuit. The “repo man” man comes and takes the vehicle.

In many ways, car repossessions are just as damaging as foreclosures, because today a car’s value is less likely to equal the amount owed on it when it’s repossessed. That means that consumers are more likely to have a deficiency (owing money to the lender after the car is sold).

In rare cases, a car may be worth more than what the amount of the loan is. In that case, the lender may want to just keep the car. However, consumers have a right to demand the car be sold. This could be a benefit, as the consumer would receive the excess money after the loan is paid off.

Defenses to Deficiencies

If there is a deficiency judgment, it can be even more damaging than losing the cars, which (credit allowing) can always be replaced. However, there are some defenses to an automobile deficiency that consumers can assert.

  • Improper Payment Calculations – Many car lenders fail to calculate prior payments made. If the debt is being serviced by a servicer or a debt collector or buyer, that entity may not have full and complete records from the original lender.
  • Lack of Notice – Florida’s repossession laws require that the consumer be notified of the details of the sale of a vehicle.
  • Commercially reasonable procedures – A repossessor/lender must sell a vehicle in a commercially reasonable manner. This may include reasonable notice to the public, an open-bidding process, and usage of a licensed and experienced sales agent or auction company.

Sale price by itself is not determinative of whether the sale procedure was reasonable, but if the car sold for significantly under value (leaving you with a greater deficiency), it could be an indication that the car was not sold or auctioned properly.

  • Personal Property – Any property of yours that is not affixed to the car (like a stereo), must be held and returned to you. You must be given notice that your property is being held and a fair chance to retrieve your property. You may be able to setoff a deficiency by the amount of any of your property inside the car that is wrongfully destroyed.

Contact an Attorney Today for Help

If you face a judgement or harassing creditors, the Miami consumer rights attorneys at Jacobs Legal can help you in enforcing your rights.

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