# Question about car repo



## ratherbefishin (Jan 4, 2009)

My cousin got a couple months behind on his car payment and a repo man came to his home and picked it up. He had asked me if he could still be charged for what was owed on the car and I have no idea. But I figured I would try to help him out if anyone knows about this please reply. Thanks


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## biggdogg (Jan 4, 2009)

the car will be sold at auction. he will be responsible for the difference in what he owes and what it sold for. he'll be getting letters from a lawyer in a few months.


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## polaris30144 (Jan 4, 2009)

biggdogg said:


> the car will be sold at auction. he will be responsible for the difference in what he owes and what it sold for. he'll be getting letters from a lawyer in a few months.



Exactly right on. The bad part is the difference between the auction price and what was owed is added to the cost of the repo, which is usually around $450-$500. The short answer is the letters from a lawyer will be coming and the amount owed could be substantial.


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## Nastytater (Jan 4, 2009)

I'd have to say that these guys are exactly right....Only that the repo's are usually charging what they want to get paid...I've had the chance to do this kind of work before and found out that it's not for me...I'm much nicer than this....
                      Bad line of work here....Too Dangerious.


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## jason4445 (Jan 4, 2009)

Unfortunately Georgia is one of the few states that still has laws on the books that let lending people repo/foreclose, sell the item at auction and still have you legally owing for something if the auction price does not cover what is owed and all the fees.

And man the fees - repo fees, lawyer fees for the repo papers, court fees for approving the repo papers, plus all the late fees and other collection fees that happened before the repo.  Then if you do not pay what is owed, and who can if it is repoed, then they start the collection process all over again, adding in all those fees then you wages become garnished. In Georgia repossession is a big money making business for all concerned.

So many people think that once they turn something back to the bank or "let them have it" that is the end of it - man it is just the beginning.


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## germag (Jan 4, 2009)

jason4445 said:


> Unfortunately Georgia is one of the few states that still has laws on the books that let lending people repo/foreclose, sell the item at auction and still have you legally owing for something if the auction price does not cover what is owed and all the fees.



What are the states that don't allow for lenders to sue for the "gap"?


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## polaris30144 (Jan 4, 2009)

I don't feel sorry for the people that have bought vehicles they can't afford, however I do have sympathy for those that have a temporary financial crisis through no fault of their own and there is no mechanism to help them weather it. Then they have their plight exacerbated by predatory companies founded to prey on these types of people. 

 IMO, the companies that make questionable loans should be limited on what remedies they can recoup if the loan goes into default. They are already charging outrageous interest rates because the loan is shaky, they should eat some of the loss because they allowed the loan. The consumer gets to pay for the car twice in some cases and still ends up with no car.


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## hoochfisher (Jan 4, 2009)

they allow the shaky loans just for the reason it will default, so they can clean up when they do.

just a ? none of my buisness really, but does he have a 401k he can dip into to maybe pay the car off?
i owed 4200 on my wifes car at 9. something interest(first loan,so i get hammered with high interest), borrowed the payoff from my 401 with a rate of 3.25.
got it paid off, no more anoying car loan company, paid off at the same time, lowered my monthly, and it's taking out automaticly so if things get hectic(happened before) i wont forget to call/send it in.


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## mossyback8874 (Jan 7, 2009)

Actual lending institutions don't intentionally make bad loans.  I know it used to happen, but the regulations that the banking industry has today pretty much negate  predatory lending.  From a lenders perspective (me), it's very understandable that people have hardships.  However, banks need to be able to recoup their money off of a loan in default.  Banks are just like any other business, we have to try to make money also.  It's not unfortunate that Georgia still has laws that protect banks.  It's unfortunate that quite a few people are deadbeats and won't pay their bills.  Before I get blasted, I understand people go through hard times.  But there are a lot of people out there who just have no pride and don't care whether they pay their bills or not.


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## germag (Jan 7, 2009)

mossyback8874 said:


> Actual lending institutions don't intentionally make bad loans.  I know it used to happen, but the regulations that the banking industry has today pretty much negate  predatory lending.  From a lenders perspective (me), it's very understandable that people have hardships.  However, banks need to be able to recoup their money off of a loan in default.  Banks are just like any other business, we have to try to make money also.  It's not unfortunate that Georgia still has laws that protect banks.  It's unfortunate that quite a few people are deadbeats and won't pay their bills.  Before I get blasted, I understand people go through hard times.  But there are a lot of people out there who just have no pride and don't care whether they pay their bills or not.



A good example is a house in a subdivision down the road from me....the house was foreclosed ($350K mortgage) and while the mortgage company was in the process of foreclosing, the guy goes out and buys 2 (two) new cars....then walks away from the house.


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## Twenty five ought six (Jan 7, 2009)

> What are the states that don't allow for lenders to sue for the "gap"?



That gap is called a deficiency.  I don't know of any state that doesn't allow  deficiency --doesn't mean there aren't any.

Where Georgia does stray from a lot of states is that a predicate to a deficiency is that the collateral (in this case a car) be sold in a "commercially reasonable manner."  In most states this means that the car has to be sold retail (just like it was bought by the debtor), and that any gross deviation from book value creates a presumption that it was not commercially reasonable.  The dealer/lender then has to provide an explanation as to why the sale was commercially reasonable if it wants to proceed.

In Georgia, the courts have long held that a sale through a wholesale auction house open only to dealers is "commercially reasonable", and that dealer does not have to account for any gross discrepancy between sale value and "Blue Book."  This of course creates a "you scratch my back, I'll scratch yours" culture at the car auctions, which depresses prices below the normal wholesale values.

Actually the repo fees are not added to the balance owed, and the attorney fees are limited by statute to a percentage of the balance (usually 15%).

Another problem in Georgia is that there is no right to cure, and once the car is repo'ed, the lender will insist on the payment of the balance in full.

Also, while I don't know of any states that don't allow deficiency, judgments,  but at least half the states or more, don't allow wage garnishments (including our neighbors, Florida and South Carolina), so most working people don't worry about getting a consumer type judgment against them.  As far as your credit, there is little difference in a repossession and a judgment.

Feel free to PM if you want some more specifics.


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## germag (Jan 7, 2009)

Twenty five ought six said:


> That gap is called a deficiency.  I don't know of any state that doesn't allow  deficiency --doesn't mean there aren't any.
> 
> Where Georgia does stray from a lot of states is that a predicate to a deficiency is that the collateral (in this case a car) be sold in a "commercially reasonable manner."  In most states this means that the car has to be sold retail (just like it was bought by the debtor), and that any gross deviation from book value creates a presumption that it was not commercially reasonable.  The dealer/lender then has to provide an explanation as to why the sale was commercially reasonable if it wants to proceed.
> 
> ...




Good explanation. I just wasn't aware that there were any states that didn't allow for the lender to sue to recover the difference (or deficiency). Hardly seems fair to expect the lender to take a loss with no recourse if the borrower defaults.

Do you think it's a good idea to require the lender to sell the property at retail? It seems like it's a good idea on the one hand (protecting the borrower from unfair practices), but on the other hand, doesn't it sort of force the lender into the retail car sales business? Most lenders just want to lend money, not sell cars.


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## Twenty five ought six (Jan 8, 2009)

> Do you think it's a good idea to require the lender to sell the property at retail?



It's not really my idea.  The sale of automobiles and the security interests in them are covered by the UCC. The UCC requires that collateral which is repossessed through a self help repossession, as opposed to a judicially approved repossession, be sold in a "commercially reasonable  manner."  The idea is that the deficiencies are to be minimized and the debtor protected by making sure that the collateral brings as much as possible to reduce the principal of the debt.  Georgia is in a definite minority in defining a wholesale auction as "commercially reasonable."

It's true that most lenders don't want to be in the car business any more than they want to be in the real estate business.  Sometimes though, that's just the way the cookie crumbles.

You have to remember that the lender has other remedies.  It can do a judicial foreclosure, in which the car is seized by the High Sheriff and disposed of by public auction, and there is no issue of commercial reasonableness.  This procedure may actually have some merits for the lender, because a separate action for a deficiency judgment need not filed.

Likewise, the lender is always free to accelerate the balance, and sue on the underlying note/contract.  The lender is under no legal obligation to seek satisfaction from the collateral.  This little factoid comes as a surprise to debtors who have trashed the collateral and think the lender has to go through the motions of recovering the collateral before seeking a judgment.  Actually there are a lot of lenders who don't realize this.   Given all the costs and delay in doing a repo (and contrary to what some posters have asserted, those costs (except for some legal ones) are a out of pocket dead loss), if the collateral has minimum value, it is more prudent for the lender to just go ahead and sue for the entire balance.  It's just that lenders feel that it's a moral outrage to let someone keep a piece of collateral without paying for it.  It's an interesting conversation to have with a banker.


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## germag (Jan 8, 2009)

Twenty five ought six said:


> It's not really my idea.  The sale of automobiles and the security interests in them are covered by the UCC. The UCC requires that collateral which is repossessed through a self help repossession, as opposed to a judicially approved repossession, be sold in a "commercially reasonable  manner."  The idea is that the deficiencies are to be minimized and the debtor protected by making sure that the collateral brings as much as possible to reduce the principal of the debt.  Georgia is in a definite minority in defining a wholesale auction as "commercially reasonable."
> 
> It's true that most lenders don't want to be in the car business any more than they want to be in the real estate business.  Sometimes though, that's just the way the cookie crumbles.
> 
> ...



I understand it's not your idea.....

I was just asking your opinion. I have no direct interest in this because I don't lend money, repossess cars, or have any in danger of being repossessed....it's just interesting to me.

I also watch that Repo show on TV sometimes..... I know, I know....sometimes it's pretty funny, though. The other day they actually repo'ed a 1993 Metro Tracker from a pizza delivery guy . He tried to ride away on top of the car slinging pizzas everywhere.....that _had_ to be staged at least to some extent....nobody is really that stupid. Every once in a while they hose somebody down with pepper spray or someone pulls a gun on them.....I guess I should really find something better to do with that time, come to think of it. 

That Matt guy is a muscle-bound moron, by the way. One of these days he's going to meet up with someone that's going to make a pink foamy spot on the sidewalk out of him.


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## greasemnky20 (Jan 8, 2009)

*Yeah that deficiency ain't right.*

My little brother bought a 2002 Kia from a dealership for somewhere around $6500.  Then when my stepdad passed away last year, my family fell on hard times, and he lost his job.  He notified the company, and told them that he was going to make things right and they said they would work with him to help him keep his car.  Well about 2 months later he found a job and called to say he could pay again, and they said good we need 2 months payment plus a 1 month retainer payment so this doesnt happen again.  Needless to say he couldnt swing that, and they said thats fine we are coming to get the car.  He had already paid them over $2000 in payments.  When they came and got it he just went on living, about a month later they sent him a bill from a collection agency, who unlawfully contacted his employer about garnishment of his wages for $9000  on a $6500 car.  The deficiency is there so if you have something as devastating as a repo happen to you, you wont be able to get up from it.  My 21 year old little brother may have to go bankrupt from this crap.


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## mossyback8874 (Jan 8, 2009)

greasemnky20 said:


> My little brother bought a 2002 Kia from a dealership for somewhere around $6500.  Then when my stepdad passed away last year, my family fell on hard times, and he lost his job.  He notified the company, and told them that he was going to make things right and they said they would work with him to help him keep his car.  Well about 2 months later he found a job and called to say he could pay again, and they said good we need 2 months payment plus a 1 month retainer payment so this doesnt happen again.  Needless to say he couldnt swing that, and they said thats fine we are coming to get the car.  He had already paid them over $2000 in payments.  When they came and got it he just went on living, about a month later they sent him a bill from a collection agency, who unlawfully contacted his employer about garnishment of his wages for $9000  on a $6500 car.  The deficiency is there so if you have something as devastating as a repo happen to you, you wont be able to get up from it.  My 21 year old little brother may have to go bankrupt from this crap.



It sounds like your brother was dealing with a very unreasonable lender.  Any lender worth a darn will work with someone if they are trying.  Sorry to hear about that.  However, a bank really needs the right to be able to recoup the whole loan amount.  A lot of banks are being shut down by the OCC and FDIC right now because of capital erosion due to loans in default.  And I'm not trying to give unsolicited advice.  But man, try to talk your little brother out of that bankruptcy.  It could haunt him for a very long time.


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## greasemnky20 (Jan 8, 2009)

mossyback8874 said:


> It sounds like your brother was dealing with a very unreasonable lender.  Any lender worth a darn will work with someone if they are trying.  Sorry to hear about that.  However, a bank really needs the right to be able to recoup the whole loan amount.  A lot of banks are being shut down by the OCC and FDIC right now because of capital erosion due to loans in default.  And I'm not trying to give unsolicited advice.  But man, try to talk your little brother out of that bankruptcy.  It could haunt him for a very long time.




I completely agree with you the bank does need to be able to recoup the amount of the loan, however my problem stems from the fact that these banks are selling these cars for 1/4 of what they are worth.  If they come get the car then they have been paid for the vehicle for however long it took the person to default, and they now have the vehicle back.  The way I see it they have everything they need cause now they can resell the vehicle and make more than they would have initially.  Instead they sell at auction for pennies and they want the dollars from the people who couldn't pay in the first place.  For instance, my bank Robins Federal, if they repo a car they list it in a bank bulletin and sell it for the remainder of the loan, they do no deficiency.  If the car payment could not be made why not cut the losses and sell the car legitimately not at cheap auction.  I am trying to talk him out of it but at this time he can't afford the 232 dollars a month these people want for the next six years to handle this deficiency.  Thanks for the advise though, but you can i'm sure see my frustration with the whole policy.


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## Twenty five ought six (Jan 8, 2009)

> He tried to ride away on top of the car slinging pizzas everywhere.....that had to be staged at least to some extent....nobody is really that stupid. Every once in a while they hose somebody down with pepper spray or someone pulls a gun on them.....I guess I should really find something better to do with that time, come to think of it



That's good "reality" TV.  In the real world, it's instant lawsuit.  

 A self help repossession must be made without any "breach of the peace".  The real professional repo guys know what this means, and don't subject their clients to liability by pulling the stunts shown on TV.  

My opinion is that in a theoretical sense, the way deficiencies in Georgia operate are probably not the best solution.  I don't know the exact number but I'd venture to guess that 90% of the folks who get garnished for a deficiency immediately file bankruptcy.  This wipes out the judgment.  So the bank doesn't get anything any way, the debtor's credit is trashed more than it needs to be, and at the end of the day, everyone but the lawyers walks away with nothing.  Economically that's not such a bad deal for the lawyers, but from a societal point of view it's probably not the best.

The real irony is that if you file bankruptcy to wipe out a deficiency, there are lenders and dealers who will seek you out, because at that moment you are probably the best credit risk in the world.

Some of the accountants may jump in, but apparently from the lender's point of view, the worse thing is to have a non-performing loan, and balance sheet wise it is much better to convert it to a bad debt.  I've been told by my banker friends that a non-performing loan is the banker's nightmare.


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## Dead Eye Eddy (Jan 13, 2009)

My bank has a fenced lot where repo'd vehicles get put on display.  Sales are handled by sealed bid with the minimum bid being the payoff on the loan.  I don't know how they handle it when no bids are placed on a vehicle, whether they lower the minimum bid, then seek deficiencies, or not.  They usually sell the vehicles and make more than they would have made otherwise.  I placed low-ball bids just barely over the payoff on a couple of repo'd trucks several years back, but didn't win them.


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