I have a debt that is a valid debt, sort of. When times got tough about 5 years ago, I had a vehicle I was trying to hold on to due to being upside down in it. I got behind about 3 months, and they threatened to repossess. I had just lost the house, and was now, finally, financially able to rectify the car. I called and negotiated a catch-up payment of all past due and penalties. I paid it over the phone via direct draft, even. A week later they repossessed anyway. Then they sold the vehicle for half of what it was worth retail value, and still far under what it was worth trade-in value. (value, by blue book then was $12,000. They sold it for $6400) the condition was low miles, perfect mechanical, good exterior, immaculate interior. The good comes from a crazy neighbor dog that scrambled in the passenger window one day. Light scratches all over the door. No dents, dings, or damage otherwise. So, I called when I found it missing one morning, after contacting the sheriffs department who informed me they had a repossession filed for that address, and the lender told me they had every intention of repossession when they played along with my agreement to catch up, so they could get more money. Naturally, I told them to go to hell, I'd rot in my grave before they see another cent. Being a reasonable fellow and all. So, time passes, 2.5 years ago I called and asked to speak to someone who can negotiate. I talked to a guy, explained the situation. He apologized amd said that that was very wrong of the loan agent. I asked if we could negotiate payments for the portion I felt was valid debt. he was cooperative, and asked I send a payment to show good faith. (I was dumb and didn't know about loan dating...) I sent a payment, they sent me a statement showing twice as much as the balance showed when I told them to go to hell! They wouldn't negotiate, at all, and now the aging date on the loan was reset. Well, I got a letter this week from a lawyer. I sent validation request, validation came within 10 days, is complete, and clear. no doubt they are going to file judgement. Any hope this story would see any sympathy from a judge? Total debt listed on the forms: $24,000. Total I should owe after sale of the vehicle, had they sold it at anything even remotely resembling retail: $2500. Total loan officers with a special seat in hell: 2
I highly doubt it. They have the proper documentation it seems to go for the full balance. Although if you get the right judge I assume anything is possible.
Okay, let's slow down a bit on this one, and walk through itthis may be what you present to the judge!). First, if you brought the loan "current" with your "catch up payment", then the repo should have been cancelled. But, obviously it was not, but the "repo" now falls into a gray area of the law. So, let's put that aside for a minute. Next, the balance "owed": You need to do some homework here: you will need to go back and estimate the "payoff" value of the loan, at the time of repossession. The best way to do this is to go to www.bankrate.com, plug in the numbers for your original loan, and then click on "show amortization". This breaks down the loan by monthly amounts of interest paid, and principal balance. Auto loans are "front loaded" for the interest, your monthly payment goes more towards interest in the beginning of the loan, and vice versa towrds the end. So, look through your records for a copy of the loan agreement, records of all payments (checks, bank statements, etc.). Document starting balance, amount paid, and estimated "payoff amount" at time of repo. The main item here is that the finance company cannot attempt "to make money" on this. They can only legally recover thier "damage or loss". For example, if they had sold the car for $20K, then the overage of say $6K, would have to go to you. So, legally they can only hold onto the amount required to "close the loan", and any costs for repo and sale. So, based on your numbers, it appears the balance should have been about $8500-$9000(?). You need to clarify some of the numbers and amounts here. But $24,000 seems crazy! No judge is going to award them that amount. You will need to pull up your documentation, and hopefully an estimate of the fair market value at the time of sale, for the vehicle. Try going to your local library, sometimes they have older copies of the NADA, or Kelly Blue Book, to look up the value. In summary, if it were me, I would be telling this firm that I can't wait to see them in court! I would be looking at a countersuit for predatory business practices as well. You say they sent "proper validation"..did this include a breakdown for accounting how they got to this amount of $24K? Last, but not least, check your state's laws for the "Statute of Limitations" for legal debt collection. You may be past it, maybe not. But it is defintitely an item you will need to know. Being past "SOL" means that a judgement cannot be entered against you, IF YOU raise the defense (in court) that the debt is past "SOL". They can still try to sue you, and no one will raise this defense for you, YOU MUST. So, do some homework on the financial breakdown of this loan and transaction, check your state laws for "Statute Of Limitiations" for debt, and look at the original loan agreement's terms and conditions.
So, in the case of making a payment, does that reset the SOL clock if the loan is not brought current? Anyway, here's a thread I posted a while ago with a list of affirmative defenses (note, not all may apply, but it's a good place to start). http://consumers.creditnet.com/Discussions/p-the-script-post457736/postcount4.html Some likely ones you might throw back at them: Failure to state a claim Failure to mitigate damages Laches Statute of Limitations Unclean hands
Biz, I have the value at the time of the repo, NADA had it at $12k and some change the month of repo. Loan payoff, according to their paperwork, was $16,495. So roughly $4000 owed.
Unfortunately, this is not how the process works; it doesn't matter what the "book value" was at the time of sale. It matters what they sold the vehicle for. The difference between loan payoff amount, less vehicle sale proceeds, (and costs), is the balance you owe. The hard part here is "evidencing" that they sold the "repo'd vehicle" below a "reasonable market value" considering the "sale conditions". For example, if they sold the exact same vehicle for $9000 instead of $6400, then you may have a case. But if the sale price was "reasonable" for an auction sale, then it must be accepted. The other issue here is that your "catch up" payments did "reset" the Statute of Limitations" for legal collection activity on the debt. I'm sure you were trying to do the right thing, but sometimes "legal" and "right" are opposites. You have two avenues to pursue here: 1) The $24,000 total debt seems "gouging", the creditor can only recover the amount they are "damaged". You need to push for validation of thier claimed amount for the debt. No judge will award them "profit". 2) Look into your state's laws regarding repossession; if you "caught up" with the payments, before physical repo took place, you can claim they acted illegally, and did not give you the "opportunity" to stay current on this loan, and hence allow "you" to prevent these "financial damages" from occuring. If you can "prove" the company intended to proceed with the repo, after you made the "catch up" payments, then this is fraud. I don't think they would take this one to court, especially if they know you will fight, and they're aware you know some of your rights. Keep digging, I am positive the company also violated other laws and regulations. Build the "war chest" for the upcoming battle, you may be able to "negate" some of this negative balance owed with violations of the law.
Thanks, I will work on the advice I have gotten. it seems fraudulent in the extreme that they can repo it and sell it for whatever they want, and hold you responsible for the difference in value. Essentually, they are negating the value of the collateral. Had they made it clear they would repo, I could easily have sold it for $11k at the time. it was a popular vehicle with all the options people in the region wanted... $1k below book would form a line outside the door within the hour.
Here in lies the rub, they do have to make a sincere effort to gain as much market value as possible. Again, you're picking up on two points which are critical. Are you certain of the payoff amount at time of repo? This could make a difference also.
yes, the validation package i got back was actually quite large and informative. It showed what i believed was the payoff at the time. there is a payment history, auction reciept, and noteably, a fax sent to the repo man to get it, and get it to auction ASAP. It has "get sold at auction ASAP!!!!!" written all over the margins of the fax. I suspect they knew I had remedied the loan, and they would be obligated to give it back if I made issue of it.
