Vehicle Loan Deficiency Claims in Bankruptcy

   Deficiency claims arising from either a voluntary or involuntary repossession often lead to bankruptcy filings.  As you probably know, automobiles are a classic example of a “depreciating asset.”  With every day that passes and with every mile driven, your car, truck or van loses value.

   Unfortunately, with the price of new and used vehicles as high as they are, many vehicle buyers find themselves “upside down” in their vehicle loans.  In a four or five year loan, for example, you may owe more than the vehicle is worth for the first two to three years of your loan.

   Furthermore, we often see instances where a car buyer will “roll” the existing balance of a previous car into the purchase price of a newer vehicle.  This is also a scenario where you will find yourself owing more on your vehicle than it is worth.

   If you want to research used car prices, here are a couple of places to look:

NADA used car center

Kelley Blue Book used car prices

Edmunds used car valuations

   What happens if you lose your vehicle to repossession or if you voluntarily turn it in when you are “upside down” in the loan?   The answer: you still owe the vehicle lender money, even though you do not have the car anymore.

Vehicle Lenders Act Aggressively When
Pursuing Deficiency Balance Claims

   Vehicle lenders can be very aggressive in pursuing these deficiency balances.  In addition, you may find yourself owing much more than you might consider fair because repossessed vehicles are sold at auction, usually for a wholesale value far less than what that vehicle might bring at retail.  Add on repossession costs, auction sale costs, storage costs and a manageable $500 deficiency becomes an unmanageable $5,000 deficiency.

   If you have no defense to the deficiency balance lawsuit, you will end up with a judgment that can turn into a wage garnishment or bank account levy.  If you lose a car to repossession or if you voluntarily return a vehicle there is a very high probability that you have a problem - we encourage you to call our office at 770-488-9334 as soon as you possibly can.

   Finally recognize that under Georgia law, there are procedures whereby a vehicle owner can get his/her vehicle back following a repossession.  You do not have much time (your time to act can be as little as 10 days) so you will want to contact our office as soon as possible to maximize your options.