[melacita]

My question involves an auto loan or repossession in the State of: Illinois/District of Columbia

In 2007, I co-signed a car loan (Toyota 2004 Camry) for my younger brother who lives in Illinois (I live in DC). I knew that signing it I could be reponsible for making the payments, and I was willing to do that. My mother needed transportation for chemotherapy and doctor appointments.

Little did I know a measly $250 a month payment was the least of my worries.

My brother's plates were apparently suspended due to not paying tolls on the tollways. He would just drive through them. Seriously! Just drive through them. I guess handing over 50 cents is just too much hardship for him. :/ It caught up to him when the state demanded $8000 (tolls and fines) to reinstate his plates. He was pulled over for driving on suspended plates, and the car was impounded in December.

He didn't tell me it was impounded. I didn't find out about any of this until I got a letter from Citi Financial Auto yesterday saying they repossessed the car for being abandoned at an impound lot. I have the option of getting it back if I can pay the impound, towing, etc fees but it comes to over $4000! Unfortunately, I can't manage that, and even if I could, the car won't be driveable until my brother pays the $8000 in back tolls.

The loan payments to Citi were completely current. We went past due 34 days once last year, but otherwise, 23 payments were made and reported to credit bureaus as on time. I carry too much consumer debt (though have made great progress toward paying it down) to consider trying to get a new loan to pay this one off in this economy.

Now, I understand they will sell the car at auction, or try to anyway. They'll get, what? Half the blue book value if I am lucky? Any proceeds from sale will go towards the balance of the car. I am still going to have a deficiency balance that is higher than I can afford to pay, probably around $8000 once you account for all the fees and such. Citi tells me they will garnish my wages up to 30%, or put a lien on my bank accounts or my retirement account (not that there is a ton left after the market dropped). If they take 30% of my paychecks, I will not be able to stay afloat.

Certainly I have learned a hard lesson about co-signing things. And I always intended, and still intend, that Citi get the money owed to them. I just can't make a huge lump sump payment. Will bankruptcy be my only option? Will creditors work on a payment plan against a deficiency judgement? I could probably manage to pay double the original monthly payment, maybe more, per month if I stop contributing to retirement, get rid of cell, eat lots of ramen noodles, etc. But if that is not an option, I don't know what I will do.

Am I just screwed?

[cyjeff]

It is worth noting that selling the car at auction is not to satisfy the lien on the car but the lien for the impounding.

It may be time to sue little brother.

[melacita]

"It is worth noting that selling the car at auction is not to satisfy the lien on the car but the lien for the impounding."

Hi, thanks for your response. Can you explain this, please?

Citi now has possession of the vehicle and still holds the lien on the title. They stated that they paid to have the car released from the city, respossessed it from my brother due to violation of agreement (for abandonment) and added these costs to the amount owed (I included those in what I expect we will owe). All communication has come through Citi and explicitly states that the car is being auctioned by them and that any proceeds will apply to what is owed on the car.

The car itself wasn't registered in my name or at my address, just the loan. I live 700 miles away and have never even seen the darn thing. Can I be held responsible for his toll violations and fees associated with this?!

If so, then there is no possible way I am going to get out of this. Suing him won't help, no matter how satisfying it might feel. He has nothing to take and very little to garnish.

[cyjeff]

"It is worth noting that selling the car at auction is not to satisfy the lien on the car but the lien for the impounding."

Hi, thanks for your response. Can you explain this, please?

Citi now has possession of the vehicle and still holds the lien on the title. They stated that they paid to have the car released from the city, respossessed it from my brother due to violation of agreement (for abandonment) and added these costs to the amount owed (I included those in what I expect we will owe). All communication has come through Citi and explicitly states that the car is being auctioned by them and that any proceeds will apply to what is owed on the car.

Okay, I misread that part.

So the $4000 INCLUDES the impound fees? Geez.

The car itself wasn't registered in my name or at my address, just the loan. I live 700 miles away and have never even seen the darn thing. Can I be held responsible for his toll violations and fees associated with this?!

Probably not... but I would still place a call there to find out.

If so, then there is no possible way I am going to get out of this. Suing him won't help, no matter how satisfying it might feel. He has nothing to take and very little to garnish.

Then you are going to lose the car and then be sued for the difference.

[Mr. Knowitall]

He means that the impound lot is going to expect to be paid from the auction proceeds. I expect that the auction proceeds will go to the car loan first, as the lender is secured (it has a lien) whereas the impound lot is not. Even before I got to your update, I expected that Citi would have paid the impound charges and storage fees, and added that amount to the loan balance per contract; it sounds like that's exactly what happened.

If the car wasn't in your name, you're not responsible for the tollway violation fees. (I'm taking it for granted that Citi didn't have to pay those fees to recover the vehicle; if it were required to do so, given the value of the car, I can't imagine that they would have bothered to recover it.) That means you're looking at whatever balance Citi gave you for the payoff - about $4,000, apparently including the impound, storage and repo fees.

I am not sure that you're correct about not being able to sell the car without first paying the tollway fines. The car is in Citi's possession, and thus is no longer in impound. From the informal materials I've seen, the fines will result in a suspension of your brother's license but do not prevent the sale of the car. Citi can probably confirm that for you.

If the tollway fines don't prevent the sale of the car, and if the amount you would have to pay to recover the vehicle and get rid of Citi's lien is in the vicinity of $4,000, I would personally try this: Work it out with your brother and Citi that, upon your paying off the @$4,000, title and possession of the car are transferred to you. (Get your brother to contribute as much as you can toward that $4,000 as, no offense intended, he sounds like the type who's not going to help you out later.) Then sell the car and use the money to repay whomever you had to go to to scrounge up that $4,000. Ideally that will let you break even, or come close to breaking even, rather than ending up in the hole. See if Citi will agree to remove any negative information about the repo from your credit history if you redeem the car - I don't think they'll be cooperative, but you won't know unless you ask - and if you agree to something make sure you get it confirmed in writing.

The alternative, letting Citi auction the car and paying off the difference between the sale price and what you owe (the current @$4,000 figure plus costs of sale), will leave you several thousand in the hole, plus further damage your credit.

[melacita]

"Then you are going to lose the car and then be sued for the difference. "

I am quite resigned to that. Like I said, they deserve their money. I have been paying them on time all along even though I have never seen the car. (I don't own a car myself! I take public transportation!) I knew that could happen when I signed the loan. I just never imagined this whole suspension/toll/impound fiasco.

My biggest concern now is how to pay off this difference without Citi (or the collectors they turn it over to) taking the 30% of my paychecks they say they will be able to take. Is it yours, or anyone's, experience that they will work with someone to pay down a deficiency balance over time? I will to scrimp and sacrifice to make it work.

Or do I just start getting ready for the idea that my income is going to drop drastically for the foreseeable future? They seem to have no interest in going after my brother, which makes sense I guess since I make more money than he does.

Thanks for your responses; I appreciate it.

[melacita]

[QUOTE=Mr. Knowitall;288050]

If the car wasn't in your name, you're not responsible for the tollway violation fees. (I'm taking it for granted that Citi didn't have to pay those fees to recover the vehicle; if it were required to do so, given the value of the car, I can't imagine that they would have bothered to recover it.) That means you're looking at whatever balance Citi gave you for the payoff - about $4,000, apparently including the impound, storage and repo fees.
QUOTE]

Thanks, Mr. Knowitall, for your reply.

I think I wasn't clear. The $4000 is just the impound fees and cost to get the car back and continue on the loan as usual. The full total due is around $13,000 when you combine the rest of the principle with the costs of repossessing and retrieiving the car from impound.

The blue book value of the car at trade-in is $7500-$9000. I was figuring on being lucky if they got $4000 for it to apply to the balance due.

I am going to owe them a cosmic ton of money for this debacle, and it's a tough lesson but one I will always remember.

Now I just want to figure out how I am going to pay them the $9000 or so I am going to end up being sued for. I have never worked with a debt collector before (Even when I am struggling, I have this silly habit of paying things on time, what can I say?) so I am totally clueless as to what to expect. If they take a big chunk of my paycheck off the top every two weeks, I am really going to be in trouble.

My apologies if I sound like an idiot. I am a little out of my element.

[Mr. Knowitall]

I would still urge you, if at all possible, to pay the $4,000, get the car back, and sell it yourself. Will they allow you to continue the loan if you pay that amount, or is this at the point where they want a full payoff?

At any point in the collections process you'll be able to try to negotiate payments, or even to try to negotiate a reduction in the amount you have to pay. They don't have to agree to payments, although if it goes to judgment (in which case your debt may also include an award of interest, attorney fees and court costs) you'll essentially get that through periodic garnishment - deductions the court orders be made from your paychecks. But whatever comes next, you're likely to still end up having to pay a lot more than if you recover the car and sell it yourself.

[melacita]

"I would still urge you, if at all possible, to pay the $4,000, get the car back, and sell it yourself. Will they allow you to continue the loan if you pay that amount, or is this at the point where they want a full payoff?"

I will see what I can do to find $4000 to get the car back, though this is all complicated by my being so far away. The thing with the car is that I can't get the title transferred to someone else until Citi is paid in full, right? And if I sell it myself, I won't make what is owed on it, since it is upside-down. Since I will have begged, borrowed, and stolen to get the car out of repo, I won't have any money to make it un-upside down. So I will have to find somewhere to put it (city girl, parking costs $200 a month) or have it junked or something just so I can continue to pay the loan normally.

This has all helped me a lot, thank you. I guess I am out of luck from almost any angle but I will try to do what you suggest if at all possible.