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Old 12-29-2008, 09:29 AM
 
26,662 posts, read 40,658,795 times
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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.

read more, click on the link....

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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Old 12-29-2008, 10:02 AM
Rei
 
Location: Los Angeles
494 posts, read 1,649,872 times
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My formula for buying cars is that the car price should only be 20% of my annual income, and it should last me at least 10 years.... hence my camry....
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Old 12-29-2008, 10:16 AM
 
48,509 posts, read 86,196,823 times
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That has always been the case on car loans where new or used. That is why most lenders want 20% down on new car laons. Same thoing can happen with a used car loan at even higher interest rate.looks lke the guy should ahve declared bankrupsy long before when he saw he facxed losinghis house and could pay his debts.
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Old 12-29-2008, 10:24 AM
 
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That's what I thought as well, texdav. Anytime there is a balance left over after auction/selling of your car - the finance company can sue you for the balance....as in any other debt suit.
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Old 12-29-2008, 01:39 PM
 
15,246 posts, read 17,439,253 times
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Quote:
Originally Posted by texdav View Post
That has always been the case on car loans where new or used. That is why most lenders want 20% down on new car laons. Same thoing can happen with a used car loan at even higher interest rate.looks lke the guy should ahve declared bankrupsy long before when he saw he facxed losinghis house and could pay his debts.
What continually surprises me these days is that people are surprised by the basic rules of financing. Since when is it news that you can be sued for money you owe? How is it that people are completely and utterly clueless about the basics of financing purchases? I understand that some people can be bamboozled by fast-talking sales people, but absent fraud on the part of the seller, a car financing agreement is fairly clear. The numbers are laid out in the documents and the liabilities are spelled out.

I'll stop ranting now.
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Old 12-29-2008, 01:59 PM
 
28,453 posts, read 73,510,312 times
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Documents? Spelled out? I actually should read that stuff? I just thought the signature was so the file looked all official like...

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Old 12-29-2008, 02:00 PM
 
Location: USA
3,966 posts, read 9,623,752 times
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i agree with most of the posts. My take on it is only people that are allowed to finance a car are people that make a minimum of 40,000 a year. Someone that works at mcdonnalds or in a call center should never fiance a car.
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Old 12-29-2008, 02:36 PM
 
878 posts, read 1,917,873 times
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Quote:
Originally Posted by Marlow View Post
What continually surprises me these days is that people are surprised by the basic rules of financing. Since when is it news that you can be sued for money you owe? How is it that people are completely and utterly clueless about the basics of financing purchases?
Except in California, where homes are exempt from this rule. I believe the "single action rule" is also the law in Florida. That is probably why so many people were surprised, you can't get sued after a foreclosed house, so why should you be sued after a repossesed car?
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Old 12-29-2008, 04:20 PM
 
13,084 posts, read 19,257,896 times
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Quote:
Originally Posted by bentlebee;6745173"
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."....
Yup. I'm stunned that people think they can walk away from a deal free and clear at all by giving something they agreed to purchase back. "yeah I haven't made car payments for 6 months, but here is your car back, lets call it even".

It's not a micronism of the housing market, it's a micronism of the blameless, guiltless, no acceptance of responsiblitity culture of society as a whole.

It is kind of ironic when comparing to a home mortgage default however - you owe $500k on a home mortgage - it's the banks problem (or the taxpayers problem) and you go hide in an apartment for 5 years until your credit clears; you owe $5k on a car loan - it's your problem and you will be hounded and sued to the gates of hell until you repay it.
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Old 12-29-2008, 04:27 PM
 
Location: Rockland County New York
2,984 posts, read 5,340,653 times
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I own a one year old Ford Explorer 4x4 which was reposed from its original owner. The vehicle cost about $32k when it was new and I purchased it for $17k with only 18k miles on it. The suv is in mint condition. Can you imagine what the original owner had to pay the finance company ever after in was reposed?
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