Will the company that sued me for an auto deficiency allow monthly payments to settle?

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Will the company that sued me for an auto deficiency allow monthly payments to settle?

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Auto deficiency occurs when you still owe $15,000 on a car and then that car is repossessed and sold for $5,000. Now, you get sued for the $10,000 deficiency.

Will the company accept monthly payments so you don’t have to file for bankruptcy?

There are two things we will need to keep in mind when dealing with auto deficiency.

Is this the original creditor suing you or is this a debt buyer?

It is typically easier to win at trial against a debt buyer.

Nobody is required to settle.

However, most people are interested in settling.

While you cannot make them settle, most of the time they are willing to settle.

Usually, the company will want the debt paid in full within 2 years.

They may want to see your financial info. You may not want to provide this information to them.

You’re asking them to take a monthly settlement rather than taking a judgment against you. You are asking them for a favor.

If you don’t want to give this information, you can say so. However, they may decide they will not discuss a settlement as a result.

Just be aware that this could be the reaction you get from them.

They may want a consent judgment.

This is a judgment against you.

It is called a “consent judgment” because you agreed or consented to it.

Then they’ll say, “we’re not going to execute or enforce that judgment (i.e. garnishment of wages, a lien on the house, etc.). We will hold off until you break your agreement.”

When we represent our clients, we never agree to this.

A consent judgment is like being punished before committing a crime.

Why establish a judgment before you break the settlement?

Instead, we make a document that says if we miss a payment, then they can go to court for a judgment.

A judgment entered right away can also mess up your credit reports.  (As of right now, the big 3 credit bureaus — Equifax, Experian, and TransUnion typically do not report judgments but other bureaus can).

When dealing with an auto deficiency:

  1. Find out who is trying to collect on the deficiency.
  2. Think about how much you can afford to pay and how much they are willing to accept.
  3. Be aware of consent judgments.

We hope this is helpful to you!

If you live in Alabama and you have any questions, feel free to get in touch with us.

We would be glad to help you in any way we can.

You can reach us by phone at 1-205-879-2447, or you can fill out a contact form and we will get in touch with you quickly. 

Have a great day!

-John Watts

PS — And when facing a “debt buyer” such as Velocity, Autovest, Cascade Capital, etc. you may want to fight the lawsuit instead of settling it.  Here is a video on Cascade Capital, a video on Velocity, and video on the statute of limitations for suing on an old car loan.

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