Repossessed Car Owners Shocked After Being Sued By Car Lenders
The latest in reality shows is Operation Repo, a team of “highly paid professionals” in the San Fernando Valley of California who repossess vehicles from dead beat car owners.
Some of those who had their autos repossessed in Florida have gotten a big shock: lenders are taking them to court with “deficiency” lawsuits.
According to the Tampa Tribune , those who had their vehicles repossesed believed their car woes were over until they recieved a summons to court. Lenders are now suing customers who had their autos repossessed in an attempt to recover the cost of the car in what are called “deficiency” lawsuits.
Once an auto is repossessed, lenders have the autos sold at auction, sometimes for less than half the balance owed. Out-of-demand vehicles such as SUV’s, big trucks, and large cars are bringing in even less, leaving lenders with what is called a “deficiency”. Lenders are taking the original car owner, who had the vehicle repossessed, to court, in order to recoup the cost. If a judge rules in favor of the lender, the judge can then garner wages or force the sale of assets of those sued by the lender.
According to the NPR, in 2008, analysts predict about 1.6 million vehicles around the country will be repossessed, up 10% from last year. NPR also reported that lenders are “trying to avoid repossessing” a car.
According to the New York Times, as of October 5, “repo” business has been brisk:
“In 2007, 2.15 out of every 1,000 cars with outstanding indirect auto loans — which are the kind offered by dealers and which make up 90 percent of all auto loans — were repossessed each month, according to the bankers association. That is up from 1.82 cars per 1,000 outstanding loans in 2006.”
The current rate paid by lenders to repo companies per car is about $400, while a boat longer than 30 ft. can fetch $2000.
According to the Fair Credit Reporting Act, an auto loan deficiency debt can remain on a credit report for seven years.
States have different statutes dealing with the amount of time a creditor has to take someone to court to enforce a bad debt. Creditors in Rhode Island have ten years while Florida creditors, four. This time frame is generally set by the date of the last payment made by a borrower.
By LBG
Image – This is London
You make it sound as if this is something new. It’s not. Lenders have always sued to get the balance after the cars are sold at auction. The lender can afford to let it go cheap at auction knowing that they can sue to recoup the difference. The same thing can happen with houses that are foreclosed on, unless the mtge holder agrees not to sue.
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Lenders state that they only repossess as a last resort, nowafays you hear of the repo man turning up a few days after a missed payment. The lenders are happy as they have the opportunity to recoup the majority of their losses and ultimately t’s the buyer of the car who suffers. Repossessed Cars are sold in the auctions at knockdown prices, saving the lender storage costs and avoiding depreciation. They then chase the former owner for the difference if
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