Car repossessed, legal advice?

Question

My 23 year old son had his car repossessed back in December 2006. He was told by Toyota financial, that he had to pay the balance on the loan, plus towing, plus impound fees. It came to over $17,000. Obviously, he did not have this kind of money so the car went to auction.

He now owes about $8000.00. They have offered him a payoff of $4400.00, which again, he can’t afford. Other options are a large monthly payment, wage garnishment or go to court. The monthly payment is more then half his paycheck, they told him garnishment would be as much. He’s worried because he still has to live, eat, rent, and drive to work. He won’t have enough money to live on.

My question is, would he do better going to court? Toyota says no, they will tack on court costs and interest etc. and he’ll owe more. But will the judge see it that way? Will the judge actually allow them to take so much money he can’t pay his bills? Also, we found out it was against the law for Toyota to tell him he had to pay the loan in full. By law he had the right to bring his payments current, plus impound and towing fees. We could have managed that, but they told him no dice.

My son is not trying to get out of paying his loan, he’s just trying to get payments that will allow him to eat and pay rent. Does anyone know if going to court is better or worse for him?

Citrus61 - I can't tell you how wrong you are. I have always paid my debts and have a stellar credit rating. I always told my kids to pay their bills first, take care of business. I advised my son that this "sporty" car was over his head. But he had a new sales job and believed he would be making big bucks. NOT!

He quit that job, but by then he was in the hole. He's a good kid but not good with money. He's learned a lot, which is the bright side.

I guess you don't have any kids. You'd be surprised at how they don't listen to their parents and some kids have to learn the hard way.

I'm sure your parents raised you to be a nicer person..I'd rather my son have financial problems then you personality disorder.

My son talked to a bankruptcy lawyer. He said that Toyota demanding the full amount up front is against the law. He told us to report them to consumer affairs.

The reason he got behind was his own fault. He never made the money he thought he would, but I told him...you shouldn't spend something until you actually have it.

I do not want this to be easy on him. He does need to suffer the consequences. This is a tough lesson but hopefully one he remembers for a lifetime.

We live in Maryland.

Bankruptcy is really not something he wants to do. As I stated, he is not trying to get out of his debt. He is contrite and wants to take his responsibility of paying his loan. He just doesn't want Toyota to leave him with too little money to live on.

Answer 1

Auto finance is what I do for a living and you do not want to go to court, believe me they will take Toyota's side simply because your Son defaulted on the loan.

I checked and the State of Maryland doe's allow wage garnishment of 25% per week with 10% interest on a judgment.

Toyota can not garnish your sons wages until they take him to court and get a judgment.

I know this is not what you want to here but you should take their offer and figure out a way to pay the $4,400.00, it will be a lot cheaper in the long run.

Answer 2

jeff, I hate to have to tell you this but your screwed. And in a pretty big way. To start with the banks going to go after whoever can or will pay the balance due and believe me the balance is going to stagger you. They're going to add legal, repo costs and storage to the balance of the loan. By law they'll auction it off but at best it'll go far below it's true, normal wholesale value simply because by the time it gets to an auction block it'll have been towed, very poorly handled, possibly even damaged, ransacked or have parts removed and not cleaned and dirty. If you don't pay they'll ruin your credit, get a judgement and they'll just sit back and wait until either or both of you come into money and they'll be there with their hands out and if the amount you end up owing after the auction is staggering wait until you see the amount a few years of a judgement collecting an absorbitent amount of interest will cost you. About the only legal recourse you can give a try is sueing your ex, but the chances of your winning and than collecting are slim to none. The banks will never let you off the hook, especially now that you both defaulted on the loan, which by the way is now and has from the time you co signed, basically your loan. Depend on their coming after you. It's only hers if she pays. And if you do go to court, even if you win it'll be almost impossible to collect and if niether of you pay your credit will be shot no matter what. The other thing is if you everr want to finance a car, the meer fact your credited with a repo will kill any hope of that happening. Loan companys will tolerate just about anything but a bankrupsy or a repo. No s_ _ t,..A credit company would be more forgiving of your shooting their rep guy than your cars being repossed. Sorry to have to tell you this.

Answer 3

Toyota Financial Repossession Policy

Answer 4

I am not aware of any laws that once a loan is in default that it is actually illegal to demand payment in full. There are usually clauses in the contract that states that once it is in default the lender can demand payment in full. However, if an attorney told your son this, he might want to get a couple of other opinions from lawyers in his area.

Not what you want to hear, but it sounds like Toyota is totally in their rights. He defaulted on the loan, they sold the car at auction, and he owes the remaining balance. Court would be the worst case for him. They will sue for the entire $8,000 + any additional court costs and interest, not just the settlement amount. So by the time he is done, it would probably be approaching $10,000.

Now depending on the state you live in, Garnishment may or may not be allowed. If it is not allowed in his state, they will then go after his bank accounts. If it is they can take up to 25% of his paycheck each time until it is paid off. For the garnishment they do not make allowances for other expenses.

Other options to consider is Bankruptcy. However if this is his only debt this is a bit drastic and there are other ways that should be looked at first. Can he get a loan with a longer term that would be lower payments? Is there any family members that would be able to loan him the money? If none of those are an option he needs to go over his budget and anything that is not a necessity get rid of it. For example, does he have Cable TV? If so he needs to cancel it. Does he go out to movies? He may have to stop that. Then when he finds out how much money he can pay, offer to pay them that amount towards the $4400. If they do accept it make sure it is in writting and make sure he follows through.

Good Luck

Answer 5

Go see an attorney. Usually there is an acceleration clause in many contracts which upon default by the consumer cause the balance to become immediately due. But you say where you live this illegal; I'm not sure that's correct. Further, the payoff is reasonable. What probably happened was Toyota auctioned off the car and probably received back 9k (or more) for the truck. Thus they are taking a loss (probably) by allowing a 4k payoff. Toyota doesn't seem to be in the wrong here unless they violated a state law I am unaware of and only a local attorney will know the answer to. Otherwise this is a golden opportunity for your son to learn some valuable lessons: 1) New Trucks/Cars are giant rip offs, particularly for young people; 2) The consequences of financial misconduct must be borne by him alone; 3) Live reasonably
If you feel your son is an honest and reasonable person then as his mother you may want to co-sign some sort of note for him (equity, etc.) and pay off toyota, then he can pay you or a pay off a separate loan he gets. However, if you don't trust him then the answer is clear-he deserves to get disciplined financially by the courts and credit agencies for being a bum. What is your choice to be?

Answer 6

As soon as anyone defaults on any loan the lender has a right to call the loan in full. Thats where Toyota had the right to demand payment in full. This is just basic contract law. I can tell you from experience that they cannot garnish his wages for any amount that would place his life in jeopardy and afford him the inability to pay his basic bills. The courts will not force someone into bankruptcy by judgement. When Toyota petitions the courts for garnishment, they will make a request for payment of $XXX dollars due, and request a calculated normal monthly amount be garnished. You will have an opportunity to answer to this complaint and your son can refute their amount and present to the court evidence that would prove that this garnishment would cause a financial hardship. The courts should then reconsider Toyotas petition, and if they award a garnishment, it should be in an amount the court deems as appropriate so as to not cause the hardship to your son. Keep in mind however that there are never any guanrantees when working with the courts. For you to go to court first would probably not do you any good, and as Toyota alluded they would be entitled to their costs, so that move would just increase your sons burden. If your son defaulted on the loan and Toyota is due the monies, then your son is at fault and there is nothing to fight for. This is a tough lesson to learn at such a young age, but something happened somewhere along the line to trigger the default. You do not specify so we don't have those details. It may have been his mistake(s) or just a bad luck life experience like a divorce. The latter are tough breaks. He can get a ooan for the amount Toyota is asking to go away provided he can afford it and it would not place him in further financial distress. If this presents a huge financial problem for your son, maybe he should consider bankruptcy. This would enable him to wipe out all of his debts, send Toyota packing and get the relief he needs. The down side of course are the mark to his credit, and the inability to get a loan for a few years, and the discrimination by insurance companys. His credit is already marked so maybe thats not such a big concern. All he would have to do is prove to the bankruptcy court the inability to pay. Worse case is they force him into chapter 13 and HE will control how much Toyota will get each month by agreeing with the court arbitrator (not Toyota) what you can pay to each debtor. My advice to you is not to co-sign for any loan for him. This is his mess, leave him get through it without sticking you with the problem. Don't give him that safety net.

PS: He could drag this out for years just to PO Toyota. Each time they get a garnishment judgement, all he has to do is change jobs. Toyota would have to find out where he went to and then must petition the court for the new employer, the judgment does not follow him from job to job. It takes several months to complete this process. If he is in volitale sales positions, he could easily move between jobs every 7 or 8 or even 9 or 10 months. The down side is they can tak on the legal costs to the amount owed each time they petition.

Answer 7

There are some great answers here. Court is not in your son's best interest unless he has a legitimate hardship. "I got in over my head" doesn't cut it. If you were to go to court, there would be a hearing first to determine that he owes the amount they are claiming. Disputing the amount or requesting that it be itemized will just prob the opposing attorney to go harder.

4400 is the offer, they will probably take a little less, and they might even stretch the payments out for 6 or 12 months.

Talk to them, let them know you are willing to resolve it and attmepting, help your son set a budget. If possible, call them and say you have 3700 right now and will pay them if that will resolve it. If they say no, say ok that you won't give him the money. They will collect one way or another.

If all else fails and there is no reolution, they will have to summons your son to appear in court, if they do, file bankruptcy that day. It sounds like his income may be low enough to file a chapter 7 and be out from under the debt.

Answer 8

Well, for starters, it's probably NOT illegal for Toyota to force full payment of the loan balance as a condition of getting the car back. Generally, that is the way these loans are structured, and, although I am not familiar with the laws in every state in the nation, the ones I AM familiar with allow this under law.

The judge WILL see it Toyota's way. They are in the driver's seat here. (No puns intended). The judge will follow the laws of the area in which you are located. If there are no restrictions on the amount of garnishment, Toyota will get what it asks for.

Your son is best off to bite the bullet HARD and take Toyota's $4400 settlement offer. DO remember that, if Toyota goes the legal route with your son, it does NOT have to honor its offer of $4400. It can and probably WILL go for the full $8000, plus interest and any associated costs with the court action.

No solution here is an easy one, so it's best to take the one which is least difficult.

Answer 9

Toyota can't garnishee his wages until they obtain a judgement which means they have to take him to court.

That's where your son states his intentions to pay and provides the judge with a statement of income and expenses. Once the judge reviews this he will limit the garnishee to what's affordable.

Make sure that the expenses are reasonable....no room for entertainment and vacation until Toyota is paid.

Answer 10

1

Answer 11

he should come up with some way to pay the 4400 because it will be more if he goes to court. You have lawyers fees and court costs added onto the 8000 he owes. He will definitely have to pay it either way. unless he files for bankruptcy in which case he dont pay anything but his credit is screwed for 10 years.