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Car dealership demands payment of deficiency balance

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  • 01-28-2007, 05:27 AM
    9855donna
    Car dealership demands payment of deficiency balance
    I filed Chapter 7 bankruptcy and was discharged on December 1,2006.I surrendered my car in the BK.Now the car dealership sent me a certified letter demanding I pay the deficiency balance that was left after it was auctioned off! It's not the Bank that it was financed thru that's demanding the money but the car dealer I bought the car from.
    What should I do? I filed pro-se so I don't have a lawyer.
    Thanks for any help.
    Donna
  • 01-28-2007, 09:14 AM
    Just Breath
    Re: Car dealership demands payment of deficiency balance
    Does your purchase contract for the vehicle indicate that the dealership guaranteed the loan? I do believe that some car dealerships that offer financing for folks with poor credit strike deals with certain banks to provide financing for those folks with the understanding that if the customer defaults, the dealership assumes the liability. If your credit was "less than perfect", you might double-check your contract and read it carefully. If this was the case, then the dealership may have a claim because he was not notified of the bankruptcy filing.....call the attorney who filed the bankruptcy for you.

    If your contract does NOT specify the dealership's role in the event you default on the loan, and the dealership merely "bought back" the debt from the bank after the repossession, then your bankruptcy should protect you from any collection efforts of the dealership.

    Did you tell the dealership that the loan was discharged by your bankruptcy and that their collection attempt violated the automatic stay? If so, how did they respond?
  • 01-28-2007, 10:02 AM
    9855donna
    Re: Car dealership demands payment of deficiency balance
    Quote:

    Quoting Just Breath
    View Post
    Does your purchase contract for the vehicle indicate that the dealership guaranteed the loan? I do believe that some car dealerships that offer financing for folks with poor credit strike deals with certain banks to provide financing for those folks with the understanding that if the customer defaults, the dealership assumes the liability. If your credit was "less than perfect", you might double-check your contract and read it carefully. If this was the case, then the dealership may have a claim because he was not notified of the bankruptcy filing.....call the attorney who filed the bankruptcy for you.

    If your contract does NOT specify the dealership's role in the event you default on the loan, and the dealership merely "bought back" the debt from the bank after the repossession, then your bankruptcy should protect you from any collection efforts of the dealership.

    Did you tell the dealership that the loan was discharged by your bankruptcy and that their collection attempt violated the automatic stay? If so, how did they respond?

    Here is what the contract says: Upon the following events of default,you can require that the entire balance of my loan be paid at once,without prior notice or demand,If;
    #6 I file bankruptcy or if any proceeding is instituted to seek relief from my debts....

    What exactly does this mean? Will I have to pay that deficiency balance or does the 'discharge' erase all previous contracts?
    Thanks again for any help.
    Donna
  • 01-28-2007, 10:15 AM
    Just Breath
    Re: Car dealership demands payment of deficiency balance
    Hmmmmm....I'm not sure that provision in the contract is enforceable. You need to contact your attorney immediately and let him handle this for you.
  • 01-28-2007, 10:21 AM
    Mr. Knowitall
    Re: Car dealership demands payment of deficiency balance
    I don't know why the dealership would be pursuing this if it was not the lender. Do you?

    In any event, inform them of the bankruptcy and provide them with a copy of the order of discharge. If they persist in trying to collect the debt anyway, but they did not have notice of your bankruptcy action by virtue of having been identified as the creditor, you may have to bring a motion in the bankruptcy court to clarify that this particular debt was discharged.
  • 01-28-2007, 11:07 AM
    9855donna
    Re: Car dealership demands payment of deficiency balance
    Thanks for the responses.I did send them a copy of my Discharge and my petition papers naming the bank as the creditor.It was sent yesterday certified/return receipt.
    Hopefully that will be the end of it.If not I will probably have no choice but to hire a lawyer.
    Donna
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