Creditor on car loan has repoed car and charged off as bad debt am i liable to third party collection agency?
Question by Michael B: Creditor on car loan has repoed car and charged off as bad debt am i liable to third party collection agency?
creditor took the car back and told me that they were going to charge the loan off as bad debt. it appears in all of my credited reports as “charged off as bad debt” , “Acct charged off/Repossession, $ 12,793 written off” and “charge-off”. I have now a company trying to collect $ 15,573.00 from me regarding the the car.
Best answer:
Answer by Steve D
A charge off is an accounting entry that gets the bad debt off the books (the lender takes the loss). It does not relieve you of your liability – you still owe the balance of the loan plus fees.
What do you think? Answer below!
September 24th, 2010 at 8:25 am
Auto finance is what I do for a living and yes your responsible for this balance, this is the difference between what they sold your car for and what you owed them plus all fees for repossession, towing, storage, reconditioning, auction, lawyers, interest and anything else they could think of.
If the company takes you to court they can get a judgment and attach bank accounts, garnish wages (if your State allows it) and file liens on any other real property you may own like cars, boats, land and homes.
All of this will show on your credit for the next 7-years making it very hard to get approved for any other types of loans without making massive down payments, paying huge fees and State maximum interest rates.
At the very least you can expect to receive a 1099 for the amount written off and you will be responsible for taxes on this amount.
September 24th, 2010 at 8:52 am
we didn’t get a collection agency calling us, instead they garnished our wages until the balanced was paid after the resold it for less money.