Losing a vehicle to repossession can already be stressful enough. What many people do not realize is that the debt often does not end after the car is taken back.
After a repossessed vehicle is sold at auction, the lender may still pursue the remaining balance owed on the loan. This is called a repossession deficiency balance, and it can leave people facing thousands of dollars in debt even after losing their vehicle.
In this recent #WinWednesday success story, Walker & Walker helped a client eliminate more than $17,000 in repossession debt through bankruptcy.
After the vehicle was repossessed and sold, only a portion of the loan balance was covered by the sale proceeds. That left the client responsible for a significant remaining deficiency balance, along with additional sale-related expenses.
Instead of continuing to struggle with aggressive collection efforts and overwhelming debt, the client sought help from Walker & Walker.
Through bankruptcy, the remaining repossession deficiency balance was eliminated, allowing the client to move forward toward a stronger financial future.
What Is Repossession Deficiency Debt?
When a lender repossesses a car, truck, SUV, motorcycle, or other financed vehicle, the vehicle is usually sold at auction. Unfortunately, auction prices are often far lower than the remaining loan balance.
If the sale does not fully cover the amount owed, the lender may attempt to collect the difference. This remaining amount is known as a deficiency balance or repossession debt.
Many people are surprised to learn they can still owe:
- Vehicle loan balances after repossession
- Collection costs
- Attorney fees
- Interest and additional charges
Can Bankruptcy Eliminate Repossession Debt?
In many situations, yes.
Repossession deficiency balances are often considered unsecured debt after the vehicle has been sold. Bankruptcy may help eliminate these balances and stop collection efforts from creditors and debt collectors.
Depending on the circumstances, bankruptcy may also help with:
- Credit card debt
- Personal loans
- Medical bills
- Garnishments
- Lawsuits
- Other unsecured debts
Walker & Walker Continues Helping Clients Get a Fresh Start
At Walker & Walker, our team understands how quickly financial hardships can escalate after job loss, illness, divorce, reduced income, or unexpected emergencies. Repossession debt can become overwhelming fast, especially when creditors continue demanding payment after the vehicle is already gone.
Our firm continues helping clients pursue relief from burdensome debt and regain financial stability through bankruptcy solutions tailored to their situation.
If you are dealing with vehicle repossession debt, collection calls, or a lawsuit over a deficiency balance, you may still have legal options available.
