Car Loan Chargeoff & Judgement

[newstart9]

Hello, I have a question on behalf of my girlfriend.

She defaulted on her car loan. After 90 days she got a letter that her loan had
been charged off. Then she got sued by the car lender and the lender won
a judgement for the delinquent loan, etc. The lender also got a permission
on the judgement to repo the car to auction and pay part off the judgement amount.

The question is what happens to the car? Is it an unsecured loan since it has been charged off ?

Does the lender have to give notice before comming to take the car?

[justbroke]

In all of my responses below, I'm assuming that your friend did not file for bankruptcy and/or will not be filing in the next week or two weeks.

The question is what happens to the car? Is it an unsecured loan since it has been charged off ?

The car will be repossessed. The car will be taken to a wholesale auction and will be sold to the highest bidder (think of a price less than trade-in "clean" value). It is not an unsecured loan unless and until the lender sells the car! Charge off is an accounting practice and not a statement of whether property is encumbered by a loan. So, to answer your question, charging off a loan that is secured by property, doesn't magically transform the loan into an unsecured loan. The security for the loan is still the actual property.

Does the lender have to give notice before comming to take the car?

No. If the lender has the rights to repossess the property (car), then they can come whenever they want and almost wherever they want. (They can't break into a garage, but certainly can enter your driveway or yard to get the vehicle.) Most repo agents will try to do a "voluntary" surrender by offering you to meet them. If you don't, then they will literally stalk you and find out where you work -- they already know where you live. Don't try hiding it 6 blocks away from the house; my friend tried that and they found her car! Many agents will do the forced repossession in a parking lot, like at your job or when you go grocery shopping.

Okay, maybe that's more than you asked about. In any event, if you are expecting a repossession, make sure to remove ALL your personal belongings now. Otherwise, it could be weeks before you get them back and they may not come back in the same condition... or at all.

This is probably the most interesting repossession I have read about, where they sought a judgment first, before repossessing the property. Was this a title loan?

[bcohen]

I agree. This sounds like a title loan. If this was a purchase loan, then the lender would have to repo first, sell the car at auction, and then initiate collections action for the remaining balance.

In any case, depending on the dollar amount involved, the creditor may choose to file a lawsuit, hire a collection agency to hound your gf with annoying calls, sell the debt to a JDB, or simply write it off. If this was a car title loan, and the creditor already made a huge profit from repoing and selling the car, they may be less inclined to file a lawsuit knowing that the debtor (probably) can't pay even if they get a judgement.

Of course, once the repo order is out, the only way to stop the car from being reposessed (other than paying the debt) is to keep it in a locked garage at all times and NEVER drive it. The creditor would then have to file a writ of replevin with the court to force you to turn over the property.

[jetsfan2010]

I saw a special on my local news about the title loan collection practices, and how they repoed a car that had got dropped off to get service done at a local repair shop.

[justbroke]

I saw a special on my local news about the title loan collection practices, and how they repoed a car that had got dropped off to get service done at a local repair shop.

That is NO different than how regular lenders would repossess a car. The repo agents find it much easier to repossess a car when it is not at the "owner's" home! It's best to nab it at the shopping center or at the owner's job! This is when most non-payers will be off their guard.

When they get home, they tend to "hide" or otherwise obstruct the repossession (locking it in a garage). We have had people on this Forum that bragged about evading the repo man. However, it's just a matter of time before an order of replevin (issued by the court) is issued and the games are over.