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.
Hi ,
I am currently under wage garnishment in Fl for an old credit card dept. Now recently I been wanting to finish my school but need out of pocket money to start , I was thinking of doing a small loan against my 401k and pay it off with my paychek automatic. If i do this would be 401k loan also be garnished or obly ny paycheck
Talk to your HR or payroll department and see if they have had to deal with a similar situation in the past, and what they did about it. You can also talk with an experienced debt collection defense attorney in your state.
If I don’t settle or pay the deficiency will I be sued?
It is possible. Not all repossessions that result in a deficiency balance will end up in court for collection. And there are individualized factors that make someone more of a target to take to court than not.
You can prevent or eliminate this concern by proactively settling the account for less.
Hello Michael,
My wife and I are in quite a pickle. Our Nissan Altima 2012 is in the process of getting repossessed. We live in chicago Illinois. We currently owe 13,600 dollars left on the car and they are telling us that we need to pay the full balance to avoid repossession. Now we went out and got a loan for the exact amoun from a family member.. The problem is we have a good amount of credit card debt totaling up to 7000 dollars and I just started working a new job after the last few months that put us behind. Our Nissan is not in the greatest shape and I worry that it will not last without repairs for the next couple years. Should I clear our credit card debt first and get another car and start saving to settle the debt on the Nissan or should I outright pay the entire balance and keep the car? We are trying to figure out which solution would be smartest. Thanks for hearing me out!
Fill in the talk to Michael form in the right column Eddie. I will see that and email you to set up a time for a phone consult. I want to dig into your situation and goals more before suggesting what I would do in your situation. I do lean toward letting an unreliable car go back, but do not want you to make that decision without considering several things first.
I currently have 2 vehicles and want to turn in one of them due to income. It is state of CA and financed through Kia Motor and it was a lease, I am thinking of doing a voluntary repo I will have approx $15K deficiency balance, my questions are can they garnish my wages? If it is a $15K deficiency what is a realistic settlement amount? $4K?
I see more 30% settlements on auto loan deficiencies than not. If you go this route, be proactive with negotiating your settlement with KIA Finance or the collection agency they send it to. You can prevent any lawsuit risk that way. If you run into difficulty fill out the talk to Michael form and set up a consult with me.
I surrendered my car to the dealer i bought it from, i was financed by vw. I called the dealer to see if my payment could be lowed and if not i would have to file bankruptcy. I was told i need to do whats best for me. The reason i need payment lowered was i was going to lose about 300 dollars from my income to pay for healh ins. I took the car back and left it. My income consists of ssdi and a small kepers amt. My understand they cannot by law take any of my money. Is this true? Should i go ahead and file for bankruptcy?
Your social security income is protected, but you may have assets that still make you a collection target.
Is this the only debt you have? Are there credit card bills?
You might wait to see what the deficiency balance is after they auction, and then look at what it would take to settle, or just let it take its course, and then file bankruptcy if it reaches the courts.
I am almost to the point of a charge off. I am 100 days delinquent. I was just able to return to work after an unexpected surgery that couldn’t wait. But the job I accepted is only until end of Christmas. It’s seasonal. I don’t know if I will be able to catch up before work is no longer again..plus Christmas and them not being the only bills I have. I wonder if I should just let them repossess but I don’t want to be in the same shoes as the original poster of this question. I just got paperwork from the county court served yesterday telling me I am being sued from another collector. So wage garnishment is going to happen anyways. Even harder to live on half the pay. I live in washington state and filed chapter 7 in 2013 for medical debt mostly. And one credit card with 1500 owed. So I have no way out. I’ve been paying my car since 3/14 when I got it. $400 a month. And still owe over 13,000 on it..financed it for $14.5k. So I have put too much into into to end up owing it anyways if I don’t have the car. Any suggestions?
Gm financial is lien holder
Sometimes there is just no clear path to the relief you need. If you cannot make the loan payments, and turn in the vehicle, you could end up being sued on the deficiency balance. You then have to look to resolve the debt when your situation improves.
Hi. I bought a 2011 Ford Focus SES in July of 2012 and financed through Ally Financial. I did so with poor credit while underemployed which became unemployment in the Spring of 2014. My vehicle was not repossessed until December 2014. It was sold at auction in March of 2015 and I was informed of a deficiency balance of $8,644. I did not respond to it at the time. Fast forward to Summer 2016, and a debt collection agency named Synergetic Communications based in Houston began calling me in regards to the deficiency balance. I answered their call and asked them to send me proof of the debt. I even provided them with my current address, as I have moved a couple times within the same town in Connecticut over the last couple years, providing forwarding addresses each time. It has been three months since I made that request and I still have received nothing from them. I have not had my wages garnished and I also have not been served with any papers. For reference, I have lived and worked in Connecticut the entire time. Really, all I want to do is get this over with and move on. I am just not sure if I should make the first move, as I am not ready at present to offer a lump sum settlement for 30% (or more) just yet and would not for a couple months. I would appreciate any advice you can offer me
Debt collectors can take their time to respond to debt validation requests. Until they respond they cannot make additional collection efforts. They actually may never respond. The account can get placed elsewhere though.
If you are close to being able to settle this, keep saving up. You can be proactive and reach out to the agency again, or to Ally Auto Finance and find out if a different debt collector has the account.
My husband and I purchased a vehicle in NM and then later moved to NC in 2012. We defaulted on the loan and the car was repossessed in April 2014. We were recently contacted by the collections agency CU Recovery on behalf of the bank the loan was through–Guadalupe Credit Union. The amount of the deficiency we owe is $4300. The bank apparently sent notice of the sale of the car but sent it to an old address so we never received it or any other contact from them until we received the letter from the collections agency. They are pressuring me to borrow against my 401k to pay for a settled amount of $3500. I really do not want to do that so we offered to make monthly payments which would result in the deficiency being paid off in just over a year but they want us to pay roughly $1200 up front as a “payment” to lock in the following subsequent payments. We do not have that disposable income available at the moment (hence the offered monthly payments). My husband feels we should stick to our guns and insist that the monthly payments are what we can afford and do at this time. I am worried this will result in them taking us to court and garnishing wages. Even though NC cannnot garnish wages for auto loans, I believe because the car was purchased in NM, they can? Any advice will be helpful…
Your wages are protected from garnishment in North Carolina regardless.
I would hold out to settle for a lump sum of about 30% of the balance owed if it were me. How long until you can save up that amount?
We could probably have that in a couple months especially with Christmas bonuses. Do we just ask them to wait that long?
No, I would not ask. I would just wait until you have that amount in hand, or close to it, before you talk to them again. It may end up at a different debt collector by then, but that is normal, and also fine.
I was supporting my family and was a full time student. That is why I could not make payments. My car got repossessed and was sold for 11k. Now, I owe them 10k and they are demanding all the money right away. I can not afford to pay the whole amount. I dont know what to do now.
When was the repossession and auction? Who is the finance company? What if you could negotiate a settlement for less than half of the 10k? How long would it take to raise the money?
Hi Michael,
I had a repossession situation in ’14 in Pa. and have a court date for the 21st of this month with Ford Motor Credit. The attorneys office handling it for them called me to work something out but even if I do that it still has to go to “judgement.” Do I go to court? They are willing to work out a payment plan with me.
Thanks,
Dan
The payment plan route, once sued, can still end up with a consent to judgment. If you negotiate and settle for a single lump sum you can often avoid the judgment.
Are you only able to do payments? What if they took half? How quickly could you raise that?
I had a Jeep Cherokee that was repossessed in 2010. The last payment made was in October of 2010. I live in Georgia. Over the past nearly 6 years, I haven’t heard anything regarding the deficiency balance. In April 2016, I received a letter from the collection agency (Asset Aquisition Group, LLC) who bought the debt from United Acceptance. The letter stated I owed over $7000. In August of 2016, I received a letter from an attorney representing the collection agency with a different amount listed than the collection agency letter. Last week, I was served a summons for a lawsuit, showing the collection agency is suing me for $7200, $3400 for the deficiency balance and the remainder interest. I have 30 days to respond to the summons. Should I try to contact the attorney to see if a settlement can be reached (I don’t have any cash right now to offer, we just bought our first house) or should I just respond to the summons and go to court? Any other advice you have for me?
I would talk over your situation with an experienced debt collection defense attorney. I can email you a list of them in Georgia if you like?
How long do i have to start to pay back a car deficiency.
It depends on the situation. Can you post a reply with the details of your situation?
When did the car auction?
What is the amount of the deficiency?
Who is the finance company?
Is there a third party debt collector involved, and if so who?
I’m being sued for an auto loan, they say I owe late fees ECT. Now for 4 times what the loans was. I tried working with them. They won’t work with me. Taking me to court now.
What was the original balance owed? What are they saying is owed now? What is the name of the plaintiff?
Hello I am in tears! I just bought a new car about two weeks ago
And today I got papers from ford motor credit on a car that got repo back in 1997
It was dropped off my credit report
But papers say they can take my house and they sent a letter to my bank to garnish me.
I work at family daycare so I can just get my money in cash
But my question is can they come after me now? I live in Oregon not sure what the rules are here
Who got the judgment against you back then? Was it Ford that sued, or a debt buyer named as plaintiff? How much are they saying is owed today?
Hi All.
I was hoping you could provide me with some clarity regarding my situation. My car was repossessed about two years ago. Finally, i am in the process of building my credit and want to know what would be the best way of getting this off my credit score or minimizing the damage.
I called Honda Financial and they let me know I owe a deficiency balance of $1,300.
So my options are paying Honda in full or pay the debt collection company they sold the balance to. I’m sure i could negotiate the balance down or set up a payment plan with the debt collection agency.
So i guess my question is, Who should i pay and how do I ensure this come off my credit or shows up a satisfied.
Any help would be greatly appreciated!
Thanks
You can settle the Honda Finance balance with the collection agency they sent the account to. That will result in your credit report being updated to show a paid collection, and then you can go about accomplishing your credit and finance goals.
Who is the collection agency?
Hello, I live in north Carolina and was currently served a summons to file an answer withe court about an auto repo session. The suer is an atourneys office. My questions are….
#1. Should I file an answer or just ignore it? I DO NOT have the money to pay or to make payments of a decent amount.
#2. Once a judgement is placed against me, can my wages or taxes be garnished?
I have read that in the state of NC they can not garnish for consumer credit.
HELP!!!
Check out this recent video from John Oliver:
I would file an answer to delay the outcome in the hopes I could pull together enough money to settle.
Your wages cannot be garnished in North Carolina.
I am not certain about whether your state tax refund can be intercepted over a judgment. Michigan allows that, and I think a few other states. Check with a debt collection defense attorney in North Carolina on that.
2 years ago I purchased a 2014 Jeep Patriot in Arizona and then this past December moved to Michigan for a new job. I did fall behind payments, due to loosing my job, and when I was offered a job in Michigan I moved. The the car was repossessed on Thursday, July 28, 2016. My loan was through Chrysler Capital. They told me they plan on auctioning off the vehicle and then I would have a deficiency balance to pay off. Chrysler told me that they have a specific department that allows me to pay off the deficiency balance monthly. Now is this true or is a deficiency balance then sued for in court? Also I am planning on moving overseas at the end of this year, can I be sued while I am living overseas and making my full income overseas as well? Any help would be greatly appreciated.
You can make payments on a deficiency balance, but I am a fan of settling that leftover loan balance for less so you can save money. The damage is already done to your credit, and you essentially have nothing to gain by paying off the full amount, but can improve your overall situation and eliminate the risk of being sued by settling.
It is unlikely you will be sued when out of country. If you have not paid or settled by that time I would communicate that fact with them when you leave, or shortly after.
My vehicle was repossessed. There was a human error in between me and the insurance which made a lapse of 49 days. Department of insurance from the lender had not informed me until the car was repossessed.
The lender stayed with the vehicle for almost three months. They were not able to sell the vehicle and the vehicle was returned to me unconditionally but I paid the three months they had it.
Can I sue for damages?
Talk to an experienced auto loan and lemon law attorney in your state. I can email you some if you like? What state are you in?
My father co-signed an auto loan over 15yrs ago for me. I got behind on the payments so the bank repossessed the vehicle. My father has a property lien currently for the unpaid balance. What can I do to get this off lien off his credit?
The lien is the result of a court judgment. You will have to address the judgment.
Look up the the lawsuit in the court record. Who is the named plaintiff? When was the judgment entered in the court? How mush is the judgment for, and what did the court set the interest at?
Ok I have to apologize, I just posted about my son and daughter in law moving to Pa with a followed garnishment. Apparently the car was obtained in Virginia while living there for a year. They moved to NC, wages garnished there, then now in Pa. Can the garnishment be stopped through bankruptcy? Can their bank acct be levied?
Wages are protected from garnishment in Pennsylvania (and North Carolina).
How much is the balance owed today?
Thanks, I believe the amt is close to $10,000. Are the garnishments protected even if the vehicle was purchased in Virginia?
The state the vehicle was purchased, or even if the repossession happened in a different state, would not change the wage garnishment protections. You do have to assert your rights sometimes though.
Can bank account be frozen if gm financial gets a judgement against me for a car repo??
Thanks
In most states they can freeze or levy your bank account if there is a judgment.
How old is the judgment? What is the amount owed? What are your goals for resolving this?