Once the car is repossessed, the clock starts ticking. When a creditor repossesses your car for defaulting on the loan agreement, it may then attempt to collect the deficiency balance from you. Those circumstances rarely apply in car repossession cases though. If the original creditor is the one trying to collect the deficiency balance after auto repossession, inform them of state law that exempts you from paying if you owe under $2000. If the sale proceeds aren’t enough to cover your unpaid loan balance plus the lender’s costs, you’ll owe the difference—called the deficiency. My Car Was Repossessed, What are My Rights? She was asked to make payment arrangements to take care of the deficiency amount but, like me, she wasn't able to. The tow truck operator must also be registered in the state of Washington, with the Department of Revenue. However, because of the relatively small dollar figure of an auto deficiency judgment, it may not make sense to file a bankruptcy just to eliminate it. If your car is repossessed, then the creditor will probably sell it at auction. This means you can reclaim your car by paying the amount you are behind on your loan, together with your creditor’s repossession expenses. In case of default in a secured transaction, Louisiana generally DOES NOT permit creditors to recover collateral through "self-help" repossession. Repossession: Texas Auto Reposession - Can I Be Sued for the Deficiency? ... Lastly, I have a friend (here in Texas) that had her car reposessed after a messy divorce. Deficiency Laws. If the original creditor is the one trying to collect the deficiency balance after auto repossession, inform them of state law that exempts you from paying if you owe under $2000. However, state law does place limits on how the creditor may repossess a vehicle and resell it to reduce or eliminate the debt. Some states restrict the lender’s ability to collect a under certain circumstances. If your car is repossessed, then the creditor will probably sell it at auction. A deficiency balance on a repossession occurs after a credit agency seizes the property and sells it at a private sale or auction. The State of Louisiana has enacted its own Commercial Laws and incorporated, with modifications, Articles 1, 3, 4, 5, 7, 8 and 9, of the Uniform Commercial Code. Michigan is a self-help repossession state. If you don’t pay, the lender can sue you. State laws dictate whether or not lenders can pursue deficiency judgments after foreclosure. This means you can reclaim your car by paying the amount you are behind on your loan, together with your creditor’s repossession expenses. To get the car back, the debtor must take action before the creditor has sold the vehicle or signed an agreement to do so. However, some creditors may take this chance. You would owe a deficiency of $8,500 ($12,000 - $3,500 - $150 = $8,500.). The state’s laws permit the repossession of a car as soon as you default on your automobile loan.