Lenders Suing Consumers Even After Repossessing Cars
TAMPA - If you financed a car with a small down-payment, there's a good chance you're upside-down on your loan, meaning you owe more than the vehicle's worth.
Consider yourself lucky if that's your only car trouble. A growing number of Bay area people are finding they can't free themselves from their car debt even after the dealer takes back the keys.
The reason is so-called deficiency lawsuits, in which an order often is issued for a car loan to be paid off in its entirety even after it is repossessed.
They're growing more popular because cars sold at auto auctions sometimes fetch less than half the balance left on the car loan. Even after paying off part of the balance with the auction proceeds, a large gap, or deficiency, remains. Car lenders aren't always ready to forgive them.
Making the problem worse is the poor resale value of SUVs, trucks and big cars at auto auctions. When these out-of-demand vehicles sell for low prices at auction, the deficiency grows.
People often are shocked to learn they still owe thousands on a vehicle when they no longer own it, according to attorneys who work on deficiency cases. Local consumer attorney Mark Tischhauser related one client's reaction.
"They were completely stunned that if they gave the car back they couldn't just walk away from the deal," Tischhauser said. Deficiency judgments are "a microcosm of what's happening in the housing market."
How many people face this dilemma is unclear because no one tracks deficiency judgments. The Tribune found a number of deficiency lawsuits filed in Hillsborough County court, but – perhaps out of embarrassment – none of the defendants would talk on the record.
Here are two examples:
Long haul trucker. For his personal use, the trucker from the Palm River area bought a 2006 Ford F-150 pickup with $28,785 in financing from Ford Motor Credit. He represented himself in the deficiency lawsuit brought by the car lender. He said his tractor-trailer has been sidelined recently with engine problems.
With no income coming in, his home fell into foreclosure and he defaulted on the pickup payments. According to a document filed by Ford Motor Credit's attorneys, from Tampa-based Kass Shuler, the trucker's pickup was repossessed and sold. Even after the sale, a deficiency of $11,941 remained.
Ford Motor Credit sued for that amount in June. On top of the unpaid loan balance, Ford's attorney was seeking $600 in attorney's fees, to be paid by the trucker.
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If people wouldn't have bought a new car or a less expensive car they wouldn't be in this situation. I always paid the cars that I bought by paying in cash. My first car was bought after I worked a job for a couple of weeks and I saved and bought an old cheap car. I never bought a new car, but can afford one. The people owe it to their own stupidity!
No bailout please, just pay what you owe on it....
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