WHEN A CAR IS REPOED, CAN THE BANK FILE A JUDGEMENT AGAINST YOU? I NEVER HEARD OF THIS..?

Question

I never heard of this, I thought that the collection agency pays the bank.

Answer 1

The bank can get a judgment against you for the balance of the loan.  Lets say that the bank repos your car and sells it for auction for $5,000 but you owe $12,000.  They can go after you for the balance of the loan plus costs.     With a judgment, they could get a garnishment order for your wages, among other things.  

Answer 2

Auto finance is what I do for a living and when a vehicle is repossessed the lender sells it at auction for less then it's worth and then comes after the customer for any remaining balance plus all fees for towing, storage, reconditioning, auction, interest, lawyers and anything else they can think of. This normally amounts to several thousand dollars and when you do not pay they can take you to court, get a judgment and at that point attach bank accounts, garnish wages (if your State allows it) and file liens on any other property you may own like cars, boats, land and homes.

All of this will show on your credit for the next 7 years making it very hard to get any other types of loans without making massive down payments, paying huge fees and State maximum interest rates.

You are always better off to sell the vehicle and take out a loan for the difference this way you save you credit.

Answer 3

Yep, same as when your house gets foreclosed.  Even though they take back the asset, if selling it does not give them back the same amount that you owe them, they will get a judgement against you.  

Good news.  Those types of judgements (non collateral) can be discharged in a bankruptcy if you go that way.

Answer 4

yes it happens all the time for the balance of the loan not paid for the resale.

Answer 5

Sure can for the difference in what they sell it for and what you owe.  They are not concerned about your interests only their own so they could sell it very cheaply and you owe the difference.