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.
