Do I Still Owe After My Car Is Repossessed?
When your car is repossessed, you may be wondering if you still owe the lender money. The answer depends on the type of loan and state laws. In most cases, when a vehicle is repossessed, the remaining debt owed on it becomes known as a deficiency balance or deficiency judgment. A deficiency balance occurs when the proceeds from the sale of a repossessed vehicle do not cover what was owed to the lender.
In some states, lenders are prohibited from filing suit against borrowers for a deficiency balance after they have taken back possession of their vehicles. This is known as anti-deficiency protection and prevents lenders from going after borrowers for any outstanding amounts after their cars have been repoed. However, in other states there are no such laws protecting consumers so pursuing collections can be possible.
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