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  1. #1
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    Default Sued Over a Car Loan From My Parents

    My question involves collection proceedings in the State of: Massachusetts.

    My father and step-mother bought me a vehicle back in 2011 (which I did not ask them to buy for me, they decided it on their own). I made out a promissory note that was notarized that I would pay them $260/month until it was paid off. I made payments on time for the first year and then things became difficult money wise after being out of work for a disability and then ultimately being layed off in 2012. I was then fired from a job in 2013 for reporting another employee being involved in illegal activities. I am currently suing this company. ''

    I finally found a part time job in April, 2014 and went full time in Sept, 2014. After this, it was "catch up time". I have been paying $20/month faithfully. I know it's not much but I am make a genuine effort. I am divorced, only live on 1 income, live in overdraft with my checking account, don't go out to eat, go on vacations, do not buy things I don't need because I don't have the money. I don't live an extravagant lifestyle by any means.

    The vehicle is titled, registered and insured in my name. My father's name & step-mother's names are not on this vehicle at all except for the promissory note. I even have a note from my father stating to "pay what I can". Since my lawsuit from my previous job looks winable, it is moving along, I have been honest with my father about this and told him I would pay him everything that is owed to him once I win.

    He tried last year to repossess the vehicle, but when he was told by the police that he could not come onto my property and repossess because his name is not on the vehicle and it would be considered stealing the vehicle, I had to put a No Trespass Order on the both of them. My step-mother has threatened to kill me if I don't pay her. I have had to get a restraining order on her. They have also called a lawyer in the past to send me 2 letters that I should pay more. I told them I would pay $50/month, that wasn't good enough, they told me $75/month, I told the lawyer to shove it and that was the end of it.

    I now got a notice in the mail that I have to go to small claims court for this. I owe $8300, the courts in MA say they can only collect up to $7000 plus $150 court fees. If it takes me the rest of my life, I plan on paying every dime back just so I don't have to go through this. Since I am paying $20/month and they did put it in the complaint that I was paying this amount, does anyone have any idea what the clerk magistrate might do or what happens in these cases? I assume they can't take the vehicle because it's not in their name. Any and all advice would be appreciated. Thank you very much.

  2. #2
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    Default Re: Sued Over a Car Loan From My Parents

    When you agree to pay $260 per month, you are not in compliance with your contract when you pay less than a tenth of that amount.

    The court can give the a money judgment for whatever amount it is that you owe, up to the jurisdictional limit of the court. If you disagree with their accounting, you can present your evidence in court.

  3. #3
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    Default Re: Sued Over a Car Loan From My Parents

    If they were to win a judgment they could garnish your wages for up to 25% of your net income.

  4. #4
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    Mar 2013
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    Default Re: Sued Over a Car Loan From My Parents

    Quote Quoting irisheyes5193
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    Since I am paying $20/month and they did put it in the complaint that I was paying this amount, does anyone have any idea what the clerk magistrate might do or what happens in these cases?
    That's easy. The judge will issue a judgment in your parents' favor for $7000 plus the court fees plus a pretty high rate of interest:

    https://malegislature.gov/Laws/Gener...eII/Chapter235

    The $20 per month won't matter because you still owe more that the small claims limit after the adjustment.

    Quote Quoting irisheyes5193
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    I assume they can't take the vehicle because it's not in their name.
    That's true, until they get a judgment. With a judgment they could file a writ of execution and get the car. However, MA exempts vehicles from judgment up to a value of $7500. Or $15,000 if you are disabled. Probably won't make a difference in your case.

    Wages can be garnished and bank accounts can be levied but there are some significant cash exemptions as well:

    https://malegislature.gov/Laws/Gener...r235/Section34

    The best your parents can hope for is a piece of paper that isn't going to do them much good if you don't have any money.

    The worst part for you is the high interest rate applied to the balance retroactively to the breach.

  5. #5
    Join Date
    Jan 2006
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    Default Re: Sued Over a Car Loan From My Parents

    unless the vehicle is listed as security/collateral for the note they would have no right to demand the car at all. A promissory note in itself would not allow for the demand of the vehicle otherwise. and due to Jacks info about a car worth $7500 or less may allow for an exemption otherwise. Given you owe $8300 and have made very small payments for such a long time I suspect the car is likely worth less than you owe. If so, it could possibly be exempt.


    the other worst part that jack missed is; you will end up with a judgment recorded on your credit report.

  6. #6
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    Jul 2015
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    MA
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    Default Re: Sued Over a Car Loan From My Parents

    Thank you everyone for your input, it is very much appreciated. According to excise records for my town, they value it at $3500, so obviously I am upside down with this vehicle. I wasn't aware this can go on my credit report when this was just something between my father, step-mother and myself.

  7. #7
    Join Date
    Oct 2006
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    Default Re: Sued Over a Car Loan From My Parents

    Quote Quoting irisheyes5193
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    Thank you everyone for your input, it is very much appreciated. According to excise records for my town, they value it at $3500, so obviously I am upside down with this vehicle. I wasn't aware this can go on my credit report when this was just something between my father, step-mother and myself.
    They would have to figure out how to get it on your credit report. It would not automatically end up there. The judgment creditor has to actually put it on your credit report.

  8. #8
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    Mar 2013
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    Default Re: Sued Over a Car Loan From My Parents

    Quote Quoting irisheyes5193
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    Thank you everyone for your input, it is very much appreciated. According to excise records for my town, they value it at $3500, so obviously I am upside down with this vehicle. I wasn't aware this can go on my credit report when this was just something between my father, step-mother and myself.
    Your parents won't be able to personally put it on your credit report unless they are paying members of a credit bureau.

    However, a judgment will be public record and judgments generally appear on credit reports because the credit bureaus routinely and frequently obtain those records.

  9. #9
    Join Date
    Jan 2006
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    Default Re: Sued Over a Car Loan From My Parents

    Quote Quoting llworking
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    They would have to figure out how to get it on your credit report. It would not automatically end up there. The judgment creditor has to actually put it on your credit report.
    No they don't. Judgments are reported without the creditor doing a thing. As jack stated, judgments are generally sought by the credit bureaus and then reported to the credit repairing agencies.

  10. #10
    Join Date
    Feb 2015
    Location
    Atlanta, Georgia, United States
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    13

    Default Re: Sued Over a Car Loan From My Parents

    Your best bet at this point is to contact your parents or their lawyer and see if you can come up with an arrangement that both of you are happy with in exchange for them dropping the suit. You probably should have taken the $75/month they offered.

    You will lose if this goes to trial so I'd be doing anything I could so it doesn't go to trial.

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