Auto repos can lead to a deficiency judgment against you


Editor’s note: Lawyer and car-buying expert Adam Goldfein fills in for Clark Howard Monday the 19th – Wednesday the 21st of this week. Below is a summary of some of what he discussed. Visit for more information.

What happens if you have a repossession of a vehicle after a job loss, or after your income becomes reduced or you start drowning in unexpected medical expenses?

During time that you are slow paying or no paying, your credit gets dinged. Eventually it will get to a point where lenders will charge-off the outstanding balance and also seize your car to sell at auction.

Here’s the thing that nobody understands: Let’s say you owe $8,000 on your car note. The financing company seizes the car and gets $6,000 at auction. There is a deficiency balance of $2,000. You can be sued for that $2,000.

Once the financing company has a judgment against you, it can be enforced with liens on your property and garnishments on your paycheck. Know that just giving a vehicle back does not necessarily end a bad situation.

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