Debt Collection – Auto Loan Deficiency – Bank Account Levy – Wage Garnishment
I am from Pennsylvania.. I co-signed a car loan for my son 6-7 years ago, (I cant remember exactly how long ago.) My son was 16 at the time, he lost his job about a year and a half after he got the car, and I couldnt afford the payments, so we gave the car back. A judgement was placed against my son and I by default in August, filed through the Sheriffs office at the courthouse and on December 5th they put a hold on my bank account for 8,000.00. I found out about the hold by trying to use my debit card, and received the paperwork concerning the hold approx. a week later. Iimmediately stopped direct deposit of my paycheck and opened a joint account with my boyfriend to protect my money from that point on. I called the attorney/debt collector after finding out about this hold and I was told that they sent a Letter of Interrogatories would be sent to my bank (PNC BANK) and that they had 30 days to respond to this letter. Until then they were holding my account. Needless to say I was in a great financial bind, I had 300 dollars in that account that i desperately needed. Per the letter from the Sherriff office, the state of PA gives a cash exemption of 300 dollars, which what is in this account. A couple of days ago I got a certified letter from PNC Bank providing an answer to the interrogatories that was sent to me, the Sheriffs office and the attorney/debt collector. This was sent on 12/24, and it is now 12/31 and my acount is still frozen. They have never done anything to my son ( who is now 23).
How much longer will my bank account be frozen, and can they attach my wages for this debt owed?
—Keri C
It would be good to know a bit more about the nature of the deficiency judgment and the debt in order to give more than general feedback. I will pose some questions below that you can answer in a comment reply that will help me understand the collection situation better.
Wage Garnishment in Pennsylvania
Your wages cannot be attached or garnished for this type of debt in Pennsylvania. PA is one of the more favorable states protecting your income from employment in this regard. That leaves property liens and bank account levies (which you are experiencing) as options for collection action on a judgment.
Do you own real estate in Pennsylvania?
Debt collectors often use skip tracing methods to locate bank accounts in your name. That may be how they found your bank account they are levying now. Unfortunately, they can use the same tactics to locate the account you opened with your boyfriend. That account is not protected just because it is a joint account. In fact, your boyfriend’s money could be at risk.
Your account with the current levy could be at risk until the debt is resolved.
Collecting on Auto Loan Deficiency Balances
When you surrender a vehicle that you still owe money on, they auction it off. Whatever they get at auction is deducted from what is still owed on the car loan. What’s left unpaid is the deficiency balance. These deficiency balances often get sold off to debt buyers. Debt buyers will send these debts to a collection attorney. Sometimes, as is the case with you, the attorney will sue in order to collect. This type of lawsuit can end up with a judgment debt against you.
You can settle a debt that is the result of a surrendered or repossessed vehicle at any stage I referenced above. There are variables for settling debt like this that are unique to you and also the stage of collection. The collection stages are:
- Settle the deficiency amount while it is owed to original lender
- Settle with a collection agency that the original lender sent the deficiency balance to for collection
- Settle with a debt buyer after the deficiency balance is purchased
- Settle with a collection agency the debt buyer assigns the deficiency debt to for collection
- Settle with an attorney that the lender or debt buyer hires to collect on the deficiency
The amount you can save when settling a deficiency balance will vary. When there is a judgment in place after being sued on this type of debt (or most types of judgment debt), the settlement savings will generally not be as good as would have been the case when settling prior to collections filed in court.
You are better off living in Pennsylvania because your wages are protected from garnishment. Once the debt collection efforts from levying a bank account prove unfruitful, you are generally going to be in a better position to get a better deal through settlement.
Is your goal to settle the deficiency balance that is now a judgment?
The judgment is not going anywhere. In fact, the balance is likely growing with judgment interest set by the court. You can read a bit more about the long shelf life of judgment debt here: https://consumerrecoverynetwork.com/question/can-you-settle-credit-card-judgements-like-other-debts-stressed/
There may not be good options for you to settle the deficiency judgment right away. In that case you can try to manage your affairs on as much as a cash basis as you need to until you have a plan to resolve the debt.
You mentioned being a cosigner on the loan originally and that your son not hearing anything on this. That would make sense if he was 16 at the time. He would not be able to contract for the loan at 16.
Can you tell me if the loan was ever refinanced after your son turned 18?
Who was the original lender?
When was the last payment on the car made?
Who sued – the original lender, or a debt buyer? If a debt buyer, what name?
Who is the attorney hired to collect?
If you can answer my questions in a comment reply below I will have more feedback.
Anyone dealing with a deficiency balance that resulted from a repossession (voluntary or otherwise) is welcome to post in the comments below for feedback.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
I had a car repoed because I couldn’t afford the payments anymore. It was sold, the remaining balance plus interest is around $9k. Well I received a summons for being sued for the amount and $1,300 in legal fees. I’m wanting to settle but don’t know how much. I was told they would settle for around 70 percent. What should I offer?
I have more here on settling lawsuits.
Most lawsuit settlements I see tend to be between 50 and 80 percent.
Who is the original auto loan lender?
Northwest
My husband and I bought a van in 2016 and had nothing but issues with it. It had an extended warranty, but conveniently, none of the 10K in work that needed to be done was covered, including the issue that caused it to stop at speeds of 60 MPH and higher. (It was a recall for its cousin that it was modeled after, but not for it). After battling the car place we bought it from, and not being late on payments at all, we spoke with the loan company and explained the situation. It was a dangerous vehicle and they required the warranty as part of the financing, and if they wanted it to be paid on, they needed to help us get it fixed.
They fixed the issue alright – they repossessed the vehicle 6 months after it was purchased, and sold it at auction. Keep in mind – we were never late, they to this day acknowledge that.
They stated the deficiency balance was $5573.12 since June 2017 when it was sold in the state of Missouri where the loan originated in, however when they got notice that we moved this year, all of a sudden in March the balance jumped to $7300 and has since gone up every month to where it stands now to approx $7900. Also reporting to the credit bureaus is completely inconsistent.
Why would a loan company wait 3 years to charge interest? Can they do that?
I would talk the entirety of your situation over with an experienced auto loan consumer law attorney. You can find some the the National Association of Consumer Advocates.
Right now we are recovering from job loss and homelessness so settling is not affordable with 4 kids. I can afford reasonably low payments considering the situation. Although, I have never had to deal with this ever and need a bit of advice as to what I should expect.
The amount you can settle for, and get payment terms, will vary widely from one person to the next. If you like, I can ask you some detailed questions in a phone consult that will allow me to tune up my feedback. You can schedule the call here: https://calendly.com/debtbytes/15min
3 yr old auto charge off through Ally, repossessed, sold, requested a debt validation, received their deficiency amount for 11,233.84 I want to negotiate a lesser amount to pay for deletion. Is this possible? If so how do I go about this?
Kristy
Pay for delete is not common with banks, but settling is.
What if the deal was around 40%?
How prepared are you to pay a settlement in a lump sum?
If you need time to pay, how long?
Can i settle a deficiency with the attonrney for a repossesion? Im trying to purchase a home and it is affecting my debt to income ratio. SC
Yes, but negotiating settlements when a collector can see you are trying to accomplish a goal, like buying or refinancing a home, is often harder, and the savings not as optimal. More on that here: https://www.youtube.com/watch?v=QpdDks73QUw
Can your income taxes be held if you’ve had a car repossed and owe a deficit
What state are you in?
Had a 2010 Toyota Corolla owed $14,000 on it, had it for 2 years good payment history. Car kept breaking down, even had to put it in the shop, which by luck of draw the mechanic dropped his light prob under the hood next to battery so happened to cross two ground wires bolted to the frame under the hood still next to the battery one of those ground bolts had been fractured. mechanic extracted the bad bolt replaced with new one and car worked again. but that was just one of the things these problems persisted from day 2 of pulling the car off the lot for the remainder of the 2 years my wife and I had it. Stress at this point is kicking my but i couldn’t afford to keep making the payments, and fixing the car all the time with stuff that to me as a 31 year old aircraft mechanic seems to be some of the most unusual things breaking down on the car i could find all kinds of stuff online for common repairs to 2010 Toyota Corolla but non of them were any of the problems. but i had 2 heart surgeries one in Oct. 2018 and one in April 2019 and just couldnt get bills caught up after being out of work recovering from surgery. Tried taking it to dealer ship because when i called they said they would trade it in for something cheaper but was denied a trade in because it they said they car is only worth 4,000 and we owe 14,000 so we would be 10,000 negative equity and then said to give it back to the bank file bankruptcy and bring in a co-singer then he will sale me another car. i never filed bankruptcy im scared to and im afraid of what it will look like on my record. but i couldnt find any other option it was pay the car payment and live in the car with my wife, two kds, and i or give the car back so we all can have a place to still live. Bank is saying it was a repo, i drove it up to the bank went in sat down with a manager handed over the keys so it was a volunteer forfeit. but they only sold the car for 2000, out of the 14,000 that was owed and why am i paying so much for a car that isnt even worth that amount.
We often settle deficiency balances like this for half or less.
Filing chapter 7 to get a fresh start, that it sounds like you could use, may be the best course, but if you are trying to avoid that, how long would it take you to pull together half the amount that is still left owing?
I am in New Mexico I had a car repossessed in July of 2008 the original creditor was credit acceptance after the car was gone they auction it off leaving us with a balance Of around 15,000 they hired a attorney sued us in 2015 they started garnishing my husbands checks November 2019 I’m wondering if the sol in my state had run out and if this garnishment is valid they are taking close to 2000 a month we talked to a bankruptcy lawyer he said we made to much money to file bankruptcy but this garnishment is a real struggle right now I did try to set up something with the attorney doing the garnishment with no luck they told me my only option was to pay the entire balance they wouldn’t work with us at all is there anything else we can do at this point thank you !
Judgments have a whole different SOL than when not sued for collection.
Judgment creditors are at their most confident they will get paid in full, and with interest if the court granted it, when they are garnishing wages.
You do not qualify for chapter 7, so would have to be able to meet your state guidelines for hardship exemption from garnishment, or leave the job, to make it stop.
No one is likely to leave their job, so if this is causing you an inability to pay for the basic necessities, contact the court clerk next week and see about contesting the garnishment.
Hi, Michael – I realize this is an older thread, but I hope you still will see this. Long before we were married – My husband had a car repo’d in 2004, for which he was subsequently sued by Americredit (GM finance) in 2007 and received a default judgment in Indiana. The original deficiency was $10,600, but with interest, by the time of the judgment, it was $17K+. He does not recall being served on this lawsuit. Fast forward to 2016, when he’s paid off all of his debt – having forgotten about the repo’d car – he received a notice of garnishment from his employer. He, again, did not receive the summons, as he was not living where they served it. By now, the amount due was over $29K, because of accrued interest. He was garnished for 6 months, at which time, we got married, and he moved out of state. Of course the garnishment stopped, since he was no longer at that employer, and he began working elsewhere (not in Indiana) 6 months later. The attorney for the creditor has not moved to have the judgment transferred. He has spoken with a consumer debt attorney in Indiana, and he does not feel that he can do anything to help him with anything regarding procedural issues/having it dismissed or closed. He does not think they will pursue any further garnishment, since they were not able to locate him after he left his job in Indiana (they do not know where he currently lives, but of course, we know they legally *can*). However, he did suggest negotiating a settlement with the attorney representing the creditor. He also recommended doing so on his own, rather than paying an attorney. The amount currently showing owed per court documents is $5300 (the original balance minus what they obtained during the garnishment), which of course does not reflect any of the accrued interest. If my calculations are correct, after he’d paid what he did during garnishment, plus additional interest since garnishment stopped, he’s right back at about $30K remaining on this balance. Kill me now. This debt is so old that is not showing and has not shown on his credit for years – his credit actually looks great on paper (thankfully). He’d like to settle this debt, so it’s no longer hanging out there. Unfortunately, our financial situation would only allow us to offer a max settlement (lump sum) amount of around $5K. Is there any chance the creditor’s attorney would settle for that amount? We do not want this hanging out there any longer, but short of a drastic reduction in the amount, there’s no way we can repay this. Bankruptcy seems to be the only other alternative. 🙁
I would look at chapter 7 for sure, if you qualify, and if you cannot get them to take what you can pay.
I will tell you that most judgment debt I have ever worked gets settled for between 50 and 80 percent. More on that here: https://consumerrecoverynetwork.com/question/can-you-settle-credit-card-judgements-like-other-debts-stressed/
Hi I took out a 2014 Camry in September or October of 2015 the total cost of the car was $30k that December of 2015 I voluntarily repo my car and took it back to the dealership where I originally took it out from because I quickly realized that I couldn’t afford the monthly payments on it and ever since I’ve been getting calls and mail saying I have a balance of $10,000 on it and after that I never found out what happened to that Camry I don’t know if it got sold from the market or what, so my question is will they keep bugging me until it’s paid off? Or after 7 years will it come off my credit history? I currently can’t afford paying anything on that since I do have credit card dept Ive been paying off and I have $7k left on my vehicle that I have now, not paying the 10k will it affect me later on down the road when wanting to purchase a house? Also I plan on joining the military but idk if that 10k will be an issue for me joining, what should I do about the $10,000 if I can’t pay it off or what are my options?? This is happens here in the state of Texas
You can often settle this for around half or less.
It will eventually age off your credit, but they could sue for collection.
You would not be able to get a home loan while this is showing as unresolved on your credit.
Talk to your recruiter about entry into service, but I don’t think this would hold you back.
Can a you be garnished automatically for a twelve year debt? The car was repossessed 12 years ago and now my waves are being garnished and I have another court date
Court judgments have a shelf life of their own that varies by state law. In some state they can last forever, as long as the plaintiff renews the judgment timely.
I live in florida. My truck broke down 11 pm at night. The only option i had was to tow it to the dealership. I never received a written estimate or any paperwork period. They had my truck 5 Months to do a job that should have not taken more than 1 week. I went into dealership with 1000 dollar payment and they refused to take it. They have now had my truck for a year. They cost me my 20 year business. This truck pays mortgage bills puts food on the table. Im now behind on all bills because of their 5 month holding my truck. Isnt a repair supposed to be done in a timely manner? I believe i got no written agreement because had i known they’d have my truck 5 months and demand full payment id have towed it the hell out of there. What can i do?
I would talk with an experienced auto loan consumer law attorney in your state. You can find some using the drop down menus here: https://www.consumeradvocates.org/find-an-attorney
Hi there! I have an elderly mother who purchased a used vehicle 8 months ago, even though she’s unable to drive. She overpaid about 2k and also agreed to a $2600 service agreement rolled into the financing. 8 months after purchasing she owes 10.5k on a vehicle that KBB puts at 6.5k private party sale.
I’m currently working on getting Power of Attorney for her finances. I want to turn the vehicle in. She has no assets (no r/e, no retirement accts, no investment accts). Her only income is $1200/mo from social security.
I intend to explain why she is “judgement proof” to the lender when I call. Hoping they see this as a dead end and don’t bother pursuing deficiency collection or judgements.
My concern is if they do, can they freeze her bank acct if her only income is from social security?
She resides in Michigan,
Appreciate any insight
She appears to be judgment proof like you say, and that means the social security in her bank account is protected.
You should know that explaining all that to the loan servicer is not going to stop the collection train from leaving the station. She just won’t be along for the ride.
I voluntarilysurrendered my car in 2015 and have not received info about the sale of the vehicle or who the collections agency is. I’m trying to get approved for a home loan but am denied because of the potential for a lawsuit for the repo. I need help trying to find out who i contact to get this straightened out. I am hoping to use my tax refund to make a deal. Any suggestions would be appreciated.
Start by contacting the loan servicer. If they do not have it, find out the name of the collection agency the sent it to, or who they sold the balance to. Post an update with what you learn and lets go from there.
I had a car repossessed in June 2014. The loan was through CPS. I haven’t heard from them and was wondering should i just leave it alone until I hear from someone?
I generally like taking the proactive approach if you are in the position financially to do so. And waiting could mean you get sued later, where you can still settle, but at a steeper cost.
How much is the deficiency balance? Is it showing on your credit reports?
The deficiency I believe is around $10,000.00 and the repossession does show on my credit report
I would target 35% of the balance. Can you pull that together in a lump sum?
My 80 year old aunt thought she was consigning a car loan for her son after 8 hours at Jeff dambrosia dodge in downingtown pa they said sign here and it wasn’t until they got home that they realized she was the only name on the loan. They never drove the car called chase and said come pick it up etc… it was repossessed a few weeks ago and is now getting cerified letter. -any advice?
I would talk to an experienced debt collection defense attorney in your state. I can email you some with the experience you need if you like? They all offer a no cost initial consult. What state are you in?
I live in North Carolina I’m currently dealing with Ford motor credit with a repossession that I almost halfway paid off no of any no cost attorneys hear in N.C. I could frfr use the advice
Check out the National Association of Consumer Advocates.
Hello, my husband and I surrendered our vehicle because we were talking about divorcing. The bank picked up the vehichle and then sold it with a balance of 1200.00 left to pay. We received a letter from the bank and then about a week and a half later we received a civil court paper in the mail. My question is what will happen? I had planned to call the bank the day we received the civil order but they were closed when I was able to call. I am worried they will take our wages or bank accounts for the money. Not sure what to do. We want to pay but don’t have that money just laying around and would need to set up payments. Will the courts help us to set up payment?