I live in Winnipeg, MB Canada. I purchased a car 4 years ago - after a year of having the car I lost my job and 3 months later I voluntarily relinquished the car since I could no longer keep up with the payments. The car sold at auction for $6,500. At the time the company contacted me and said I still owed them $16,000 for the vehicle (roughly the original purchase price). I have not heard from them since then (3 years ago) and now they are calling again - apparently the original company I owed the debt to was sold to another financing company and now they are trying to collect the debt. Is there anything I can do?

Pay it... you are liable for any differences between the unpaid balance and what the car actually brings at auction. Or wait until they take you to court and wind a judgement and garnish you wages or bank accounts.

They may settle for something less than the amount owed to retire the debt. If it goes to court they will go after the full amount and court costs and interest.

Yes, it is very common for the amount after a repo to be more than the original sale price of the car.

You buy a car lets say 10,000, so you are late, and they add late fees, plus full interest comes due, Then there are attorney fees, fees for the auction and sale, and title transfer fees and so on

Most likely a 10,000 car, at the time of sale, has about 20,000 in debt. And a 10,000 car at auction will bring about 2 or 3 thousand.

So that is how it happens. Have they sued for a judgement yet ?

Is there anything I can do?Hello C:

Sure there is. They want $16,000... If it were me, I'd gather up about $4 grand cash, and get on the phone and start negotiating... Of course, if you have NOTHING, and can't do that, and you have no defense, you're going to lose in court if they sue, and I'll bet they will.

Now, if you REALLY have nothing, then you're judgment proof, and who cares what somebody writes down in a book?? They won't GET anything.

excon

Are you in Canada? Do you know if there is a statute of limitations on debt collection in MB? I haven't heard from this company in 3 years and I'm wondering if they are contacting me now because they are running out of time to collect.

Hello again, C:

I'm NOT in Canada. I believe, however, that the statute of limitations in your neck of the woods, is 5 years.

Time has nothing to do with it... They just bought your old debt for pennies on the dollar and they're trying to make a buck.

excon

I haven't been sued - but it shows up on my credit report - I guess it works differently here in Canada then where you are.

Well the original sale price of the car was $16,000 and car sold at auction for $6,500 - so why are they still trying to collect the full sale price of the car from me? Also, will they be able to just start garnishing me without it going to court?

Hello again, C:

Please use the ANSWER feature instead of the COMMENT feature...

No, they need a judgment in order to garnish... But, you're right... They shouldn't be charging you so much, those scum sucking collection agents... That should HELP your negotiations.

excon

They can't garnish you UNTIL they take you to court and win. After they do and win... THEN they can get a writ of garnishment from the court. They can't do that until then.

They are entitled to the full amount owed, plus late fees, interest and court costs, legal fees as well unless I'm mistaken... that is offset by what they actually sold the car for... whats left if a negative balance (and it usually is), you owe. If by a miricle it resulted in a positve balance they would owe you, that never happens.

As we mentioned... the cheapest way out of this is a settlement. Usually its less than you actually owe. But if they sue you, they will always go for everything they are entitled to.

And as was mentioned... the statute of limitation only applies if they never came after your for that time. Once they do that clock startes ticking again.

If you own real estate, they can win a judgement and place it on real estate then you can't sell until you pay the amount, plus interest, plus court costs, plus attorney fees, plus you have a judgement on your record. If its old debt they may lower the balance but you well have to make a lump sum payment. If your credit is good they might work out payment plans. They might have a lien on your property; which is different from a judgement. A lien simply states that person has unpaid debt and property can't be sold until lien is removed. A judgement is interest bearing, where a car loan is interest bearing. So basically they get you one way or another. I recommend paying, but check out you options first. I know how it feels. Five years of no contact then 14,000 dollars for a loan that I thought was written off. Secured debt almost always has to be paid eventually. Unsecured debt can be negotiated because the bank let you do anything with the money. I think their should be laws about not contacting debtors on at least a monthly statement. It's an obvious attempt to rake up more interest charges, then when the SOL comes near collect or sue. I recommend legal advise, but the sooner you arrange payments the better it will be.