loan charged off?

Question

I thought if a bank took back your car, sold it, and listed it as charged off on my credit report. No additional payment was due. Is this correct, or can they still sue me?

Answer 1

Yes, they can sue you for any deficiency left on your loan. For example, if you still owed $10,000 and the bank only sold it for $7,000, you could be sued for not only the $3,000, but the cost of the repo and any expenses related to selling your vehicle.

Answer 2

Of course they can! Where did you ever get the idea that they couldn't? If they didn't get enough out of the sale to pay off the outstanding balance of the loan, you still owe the balance. Read your loan contract; it's right there in black and white!

Typically when a vehicle is reposessed the lender will tack on a bunch of fees to the outstanding loan balance. The cost of the reposession, storage fees, repairs, cleaning, insurance, etc, yadda, yadda. Interest continues to accrue on the original balance as well as the additional charges and fees. When they do sell it, they apply the proceeds of the sale to your outstanding balance, which is often now hundreds or even thousands more than the day before the reposession. If that was not enough to pay off the debt, you owe the difference. On extremely rare occasions the sale will bring in more than the outstanding debt. In that case, they'd cut you a check and you'd be in the clear. You'd still have the repo on your credit report, though.

The chargeoff on your credit report means that the lender has written the loan off to clear it off of their balance sheet. It also screams "Dead Beat" to other potential creditors. It does NOT excuse the debt, however! If you don't pay it off quickly, they'll start collection proceedings against you.

Answer 3

They can still sue you. If the amount they sold it for (minus recovery and preparation cost) is less than the amount that you owed on it, the bank can sue you for the difference.

Answer 4

They can if you owed more than they sold the car for.