Car Repossessed? Watch Out for Debt Collectors

If you have fallen behind on your auto loan, you could end up having your car repossessed. You may assume that will be the end of your problems. But in fact, debt collectors could force you to pay thousands more on a car you no longer own.

Why People Borrow At Subprime Rates

Not everyone is able to qualify for a new car loan. Medical or student debt, disability, unemployment or other financial challenges can force borrowers to buy used vehicles using loans with subprime interest. With interest rates as high as 24% per year, some may wonder why a person would ever make that deal. But the need for a car often leaves borrowers no other option. Last year, 26.5% of all auto loans nationwide were subprime or “deep subprime”.

Car Repossession and the Collections Process

But used vehicles often come with warranty or mechanical problems that make them cost far more in the long run. When borrowers fall behind in their payments, the lender will often repossess the vehicle and sell it to recover the money owed. Borrowers assume that once they no longer own the car they won’t have to pay the debt. But increasingly, repossession is the start of the collections process, rather than the end.

The high interest rates on subprime loans mean that by the time borrowers default on their payments, they owe far more than their cars are worth. Then the subprime lenders, like Michigan-based Credit Acceptance, sue their customers for the difference. Most borrowers don’t believe they can afford an attorney, so they do not appear in court to defend against the collections lawsuits. That allows lenders and collections companies to garnish the borrower’s wages, seize bank assets, and place liens on the person’s home for years to come.

Having a Collections Defense Attorney Can Help

Many borrowers assume that they will have no chance to defend against big loan companies and their lawyers. In reality, debt collections attorneys are counting on that feeling of helplessness. They file so many cases they could not possibly take them all through trial. Errors or technical details get overlooked when borrowers represent themselves. However, when pressed, many collections companies simply cannot prove their cases.

A collections defense attorney can use those errors, legal defenses and even counter-claims for consumer protection violations to save you money. Your legal fees and costs can even be covered in some cases. Even when there is no clear legal defense, having a lawyer on your side makes it more likely that you will get a settlement that you can afford, rather than a judgment that you will be paying on for years to come.

Dani K. Liblang of The Liblang Law Firm, PC, in Birmingham, Michigan, has been defending collections cases for over 30 years. She can help you get out from under the debt created by subprime lending and desperate situations. Contact The Liblang LawFirm, PC, today for a free consultation.