repo car and still billing me

I am in Pa and recently my step-son's car was reposessed by the bank about 6 months ago. We just now received a letter, 6 months after this action, that he is liable to pay the loan even though the car was colladeral on this loan and he never did own the car. That is like saying that I cannot afford my mortgage, the bank takes over and the bank still wants you to pay your mortgage? They are now threatening to take this to court and all attorney fees and court costs will be my step-sons responsibility? How can the bank still collect the money after the reposession of the vehicle as collateral? He could not afford it then so how can he afford it now and pay for something that is not in his posession?

[JETX]

Here is how this works....

The car was collateral for a loan. I assume the loan was in default, so the creditor took possession of the security (car). The creditor then sells the car (usually at an auction) and gets about $.30 to $0.50 on the dollar. Also, the auction and repo incur costs (auction fee, towing, paperwork, etc.) these are added to the outstanding balance, less the money from the auction. Your son is liable for any remaining balance.

Example:
Outstanding loan balance is $5,000. Book value of car is $7,500. Bank spends $500 in costs to seize car (repo, towing, fees, etc.) making the outstanding balance now $5,500. Car sells at auction for $3,750.00. Your son is responsible for the difference of $1,750 ($5500 owed, less $3750 recovered).

If he doesn't pay this outstanding balance, then the creditor could sue for breach and collect judgment, plus attorney fees and costs, plus interest.

You really didn't believe that 'give the car, forgive the debt' did you??


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Steve Halket
Judgment Recovery of Houston
JRS.Houston@excite.com
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This is my PERSONAL OPINION and is not legal advice! Consult your local attorney for your specific situation and laws!