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Car Loan Debt: How to Handle the Deficiency Judgment

Car driving into the sunset

It’s a sad day (or night) when you realize your car has been repossessed due to insurmountable car loan debt, with the next step on the lender’s checklist being a deficiency judgment against you. Whether the lender gave you more than sufficient time to try to make a deal, or not, losing your car is usually traumatic.

Some vehicle owners are major car enthusiasts. They may have spent years saving up for their perfect dream car—or in some more serious cases—even building one themselves. These are the babies that have perfectly purring engines, immaculate paint jobs, and spotless, unsullied interiors. If you own a car like that, you are probably more than glad to work overtime for it, and may have even paid cash to begin with. Chances are though, like most consumers in the US, your goal was to budget in an attractive enough vehicle that could handle your daily commute and was safe and reliable for a family. Such a purchase usually involves a chunk of change for a down payment, and then a monthly car payment after that. Along with your rent or mortgage payment, these are likely to be your two most substantial financial responsibilities (we won’t start factoring in other things like orthodontists and college tuition here). They are also the most difficult to pay as soon as financial disaster strikes.

Whether you had to take time off to deal with an illness or lost your job altogether, you may have experienced a surprising and extremely detrimental interruption to your income. After several months, you may have found yourself looking at the bills and wondering which you could get rid of—eyeballing the car in the driveway. It can be very challenging to live without a car – or even to lose one in a two-car family; however, when you don’t have several hundred dollars or more to shell out each month, sometimes you have to make decisions you never expected.

If the vehicle was repossessed and the lender was not able to recoup what you owed on it, they may ask for, and be granted, a deficiency judgment. If you owed $10,000 and they were only able to sell your car at auction for $5,000, you may be stuck with a deficiency judgment of $5,000 against you. This is a blight on your credit, but you may need to fend off further, more aggressive tactics from the lender.

Car driving into the sunset

Consult with an experienced judgment attorney who also has experience in auto debt. You may be able to explore other options such as settling the debt, or filing for either Chapter 7 or Chapter 13 bankruptcy to avoid having your paycheck garnished, properties seized, or bank accounts levied. Your attorney may also be able to fight the judgment in court, having it dismissed altogether. If you have an income or assets to protect, this is not the time to go it alone!

If you are experiencing serious financial difficulties, contact us at (844) 431-3851, or email us at We can review your case and discuss all the available options with you, to include debt settlement options. Our attorneys have decades of experience in serving clients as they navigate through challenging financial situations. Let us review your case and discuss what would work best for you. We are here to help!

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