Can I Be Sued for Not Paying My Car Loan?

Loan Lawsuit with car repossession

The continuing rise in auto loan debt is placing many consumers in a financially vulnerable position, particularly during the current economic downturn. What if you are unable to pay your car loan? Can this lead to a lawsuit? Knowing the process of repossession can both lessen your stress and help you decide the best course of action.

Late Payments? Your Vehicle Could Be Repossessed

When terms of an auto loan agreement are broken, the lender can take the property back, or repossess it. If you were late or missed car payments, your lender could send a repo person to your home or your place of work to pick up your vehicle.

The repo agent must follow proper procedures in taking a vehicle. They must inform the local police of vehicles they’ve been ordered to repossess. Whether they come for the vehicle at an inconvenient time or not, they may not use force or threaten the borrower with harm. Additionally, they may not:


  1. Damage your property
  2. Break into a locked garage
  3. Threaten you with physical violence
  4. Threaten to have you taken to jail
  5. Take any other items aside from the vehicle

After repossession, the lender must send notices to the borrower

  1. Notice of Intent to Sell Property: statement of terms to get the vehicle back within a specified period of time.
  2. Deficiency Notice: Confirmation the vehicle was sold and calculation of any remaining balance owed to satisfy the loan.

Can I be sued for the Deficient Balance?

Your vehicle is considered collateral according to your loan agreement. After your vehicle is repossessed and sold or auctioned, if the sale price does not meet the total amount you owed on the loan, you could be sued for the deficiency. As an example, if you owed $15,000 on your loan and the vehicle sold for $9,000, then your deficiency would be $6,000.

If you are sued, don’t ignore it.

If you receive a court summons notifying you that you are being sued for a car loan deficiency, the worst thing you can do is to ignore the notification. Should you disregard a court summons, the case will proceed without you. A default judgment could be entered against you for the balance of your car loan, which in turn could lead actions such as bank account garnishment, property liens, or in some states, wage garnishment.

Seek Legal Help

Hiring a qualified consumer protection attorney will help you evaluate whether your consumer rights have been violated in the process of repossession. A legal consultation may help provide answers to questions such as:

  • Were payments applied correctly?
  • Were payments applied on time?
  • Were there errors in the calculation of amounts owed?
  • Were you charged unreasonable repossession and/or storage fees?
  • Did the repossession agent damage your vehicle?
  • Did the repossession agent lose or damage your personal property?

Flitter Milz is a nationally recognized consumer protection law firm that represents victims of vehicle repossession. Contact Us for a free legal evaluation to determine whether your consumer rights have been violated by an abusive auto lender and/or the repo agent.