title loan due for a car I no longer own

What is the name of your state? Utah

About a year ago my bank sent me the title to my car and a letter stating that my loan had been paid in full. Knowing that this was to good to be true, I continued making payments until recently. My car was repossessed, but not before I got a title loan. Now that it's time to repay this loan, what are the consequences I will likely face if I choose not to?

[Ladynred]

Very interesting.. we have a poster here who got a title loan on her SC car when she was in Utah for 3 months. She has returned to SC and has not paid the title loan in 2 years. Now the collection agency is threatening to have her arrested - which they may or may not be able to do after so much time as passed. She was never a Utah resident... you are. (Look for Justme757 posts)

At any rate, by not repaying the loan, they could, legally, repo the car. However, since its already been repo'd by the lender, there's nothing for the title loan place to take and they could, conceivably charge you for theft and have you arrested. You need to check the verbage on the agreement you signed when you got the title loan and see if there's anything there that tells you what their recourse is.

[djohnson]

Just curious if when you got the title had the bank released the lein against it? If they did they would have to refile or get a judgement in order to take it or repo it. I've seen this happen twice, once with a boat and once with a car. The one with the car, the bank had to pay off the title company and include that amount in with their balance to file for judgment on. The second time with the boat, the owners filed for bankruptcy and the banks note was considered unsecured and the title company got the boat. Just wondering what the banks stand is on this.

Even though you don't have the car, you still will be liable to repay the loan based on your signature. They can sue you for the balance and screw up your credit.

At the very least they will be on you until you pay them regardless of who has the car. Expect a lawsuit and collection action if you don't pay.

[Ladynred]

Well, LawMan.. welcome - we can always use some new legal eagles here

And maybe you could answer that question for the young woman with the pawnbroker problem I spoke about ?

Hey LawMan... what area of law do you specialize in?

Thanks for the greeting. I am a general practice lawyer, kindof a jack of all trades-master of a few...I recently returned to the law after running a venture backed software company in Europe, now that the days of multi-million dollar venture capital investments is over I am back to doing something more like honest work....... So I have a lot of experience with the law surrounding start up companies.


As for the pawnbroker. The bottom line in most collection cases is that there are only four principle ways of getting people to pay for debts under 10,000.


1. Foreclose on the collateral for the loan- This is the case in car loans, title loans,mortgages. Collateral is the security you gave when taking the loan,These are called "secured" loans. When there is no security the loan is often called a "signature loan" and have no collateral, the borrower simply promises to pay the money back, with interest. A lender can repossess or foreclose on the property used as collateral when the loan isn't paid. Most "secured" loans also have a "signature" element so the lender can sue you personally and/or take the collatoral you gave as security.

2. Threaten to screw up their credit- This works for any kind of loan, but it is only effective when the person has credit to screw up. If you have no credit than this is not too effective.

3. Sue in small claims court-This option is not usually available unless the debtor lives in the same state (or sometimes the same judicial district) as the one who loaned the money. Suing in "real" court is usually not an option unless more than 5,000 is involved since it costs too much. this is, of course, not a hard and fast rule since some collection agencies can sue people relatively cheaply. Even then, if the borrower is out of state, they have to track that person down and serve them with the summons informing them of a lawsuit. This often is too expensive and difficult to find the person.

4. Place liens on property or garnish wages - Once a creditor gets a judgment against you in court, they can place a lien on some of your property, which is a legal right to have some of the value of a piece of property, This is kind of like getting turning an unsecured loan into a secured loan after the fact. in some cases they can "foreclose" on the property and force a sale, in other cases they can repossess (a car, not a house) and in others they simply wait until the property is sold and they get a share of the proceeds.

Similarly, a lender can sometimes have the court garnish the borrower's wages, which means taking a certain amount out each month. This is much more difficult to do if the borrower is out of state.

These options are only available AFTER the lender takes the borrower to court and wins. The exception to this is when the person to whom the money is owed is a mechanic, lawyer, plumber or other service professional. They can file for "mechanics" liens or "attorneys liens" on the property by law, without going to court. So try not to stiff these guys .



Any threat to throw you in jail is pretty hollow. We don't have debtors prison anymore and police don't give a damn about things like that. Collectors will say a lot of things to get you to pay the money because they get a big piece of whatever you pay.

Bottom line is that if you have the money it is usually better to pay. But if you are out of state, and the amount is small, and you don't care about your credit, you don't have a lot to worry about.

Good luck

Thanks for the greeting. I am a general practice lawyer, kindof a jack of all trades-master of a few...I recently returned to the law after running a venture backed software company in Europe, now that the days of multi-million dollar venture capital investments is over I am back to doing something more like honest work************** So I have a lot of experience with the law surrounding start up companies

Cool. I just wanted to know what kinds of things we c/should refer to you
Do you plan on visiting the board often?

I hope too....

[Ladynred]

Thanks LawMan

The young woman with the title loan problem was in Provo for less than 3 months. She pawned the title to her car when she ran out of money and got only about $600 for it. She left Utah shortly thereafter. Now a collection agency is calling her in SC (where she's from and moved back to) telling her there's a warrant out for her arrest in Utah and if she gets a ticket in SC they'll arrest her. Well, needless to say, no warrant exists in either state, but the girl is scared to death to even apply for a job in fear that a warrant will turn up !! I've tried to tell her that the threats are 99% bull, but she's still scared. The vehicle isn't even on the road any more and she's not hiding it. The pawnbroker, of course, isn't going to go to SC to take the thing, its not worth it.

The Provo Sheriff's office told her that what she did is considered 'theft of services' ? Is that the case ? She hasn't the money to pay off the title loan, with no job its pretty hard to do so. She's just afraid of the possibility of criminal charges. The collection agency is a scummy one and uses all the illegal threats they can (violating the FDCPA all over the place). The debate here was, of course, the possibility of criminal charges vs. it being just a matter of a FDCPA-violating collection.

Any insight ? She posted the entire agreement she signed and I spent some time reading UT statutes and didn't find much that would indicate serious criminal charges for this.

Thanks !