What Is A Deficiency Balance And How Can I Avoid Paying It?
When loans are taken out, the lender expects that they will be repaid in full. When payments are not made, the lender might undertake collection efforts. Some of those efforts include repossession of personal property, or foreclosure of real estate. When a repossession or foreclosure takes place and the property gets back in the hands of the lender, a resale is the next step. But all too often, whether it is your car or your house, the collateral is resold at less than what is owed on the loan. The difference in price is referred to as a deficiency, and the borrower is still liable for payment of that amount. In fact, many collection cases that involve autos are for collection of the deficiency after repossession. This shocks most consumers because it can feel like a done deal, with nothing left to handle, once your car has been repossessed. The good news is that there are ways you can get out of paying a deficiency balance.
One option to avoid payment of a deficiency balance is to challenge the amount the collateral sold for, and show the Court the sale was not reasonable. This can be hard to prove, because industry standards allow for some pretty low resale values on cars. Another good choice is to file for bankruptcy, and doing this will help with more than just an auto deficiency balance. Here are some other types of debt bankruptcy can help to eliminate or reduce:
• High interest rate credit cards
• Deficiency balances on real property that has been foreclosed
• Signature loans
• Payday loans
• Medical bills
• Student loans, in extraordinary circumstances
• Mortgage arrears
• Loans for recreational vehicles such as ATV’s, or boat loans
We want to help you get out of financial trouble. If you are having difficulty stretching your dollars, call us for help. We will let you know what to expect if you decide to file for bankruptcy and will let you know what type of case you are eligible to file. Our goal is to get you back on your financial feet, so you can start over with a clean slate.
For more information about deficiency balances, contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that help get you back on your feet.