help! Sued by car dealer

[arabi]

I have been served with papers for small claims court by a
car dealer for a car that was reposessed over 2 yrs ago.
The agreement with GMAC was that once the car was repoed, it would be sold at a auction, and that was it?I even asked the collector to verify I would owe no more on this, and he said they just wanted the car.
I received a letter from GMAC 2 weeks later stating that if the car was sold and the balance due was over the amount collected I would pay the difference, and if it was sold for more than the amount I would receive money back.
That was the last I ever heard from anyone, and assumed that the car (blue book at that time was $4500) had been sold for an acceptable amount of money. The dealer never contacted me or sent me a bill saying I owed them money.
The suit is coming from the car dealer itself saying their unpaid balance is $5,879. They also added on $946 in repairs and there was nothing wrong with the car, I drove it the evening before. They show that they were only able to get $1595 for the car and are suing me for $5000, the maximum in the state of Arkansas.
I feel that is their problem for not getting more for the car, not mine and if I have to pay for it, I want the car back. They already wrote it off as a loss and were compensated on their taxes, I fill out the same forms in my business taxes at the end of the year.
The orginal price of the car was $11,900. The blue book at the time for a 94 Pontiac Grand Am with 27,000 miles on it was $8,500. GMAC charged me $5000 to finance it when I purchased it in 1996. I paid over $10,000 over the 3 yrs I had it. I feel they have made their money on this car many times over. Do I have any rights in this matter?

 

[JETX]

When your car was repossessed, your liability did not stop. Here is how this works:

At the time of the repossession, you owed an outstanding balance on the debt. The car was the security for the debt. The lender seized the car and sold it (usually in auction). You are now liable for the difference between what you owed (plus all costs of repossession, legal fees, towing, storage and auction, etc.) and what they recovered (netted) from the auction.

Example: You owed $4,000 on unpaid loan secured by car. Lender repo'd the car and incurred $900 in expenses (repo, storage, repairs to sell, auction, etc.). You now owe them $4,900.00. They sell the car and net out $2,000.00, meaning that you still owe them $2,900.00 on a car that you no longer own!! (Hell of a racket, ain't it??)

The only problem I can see in this is your claim that this debt is owed to the car dealer. It should be owed to the lender, GMAC.

As to your rights... you have the right to review all the documents and verify that you are only getting billed for actual, verifiable expenses and that you are getting credited for all moneys recovered. Otherwise, very little you can do except get ready for court. And, based on GMAC's experience with this sort of thing, they will very probably win. I would suggest you try to negotiate some settlement in order to minimize the chance of your getting hit with larger attorney fees.

 

[arabi]

Thank you for your reply. I obtained a copy of my credit report about 2 weeks ago and it shows that GMAC is paid. All I can figure is that the car dealer paid them and is now looking to me to reimburse them? I still cant see why they waited over 2 years though to decide I owed them the money?
I have been working hard to eliminate outstanding debts from farther back than this one. Perhaps they sat up and took notice of this and decided to jump on the band wagon. The car dealer does this sort of thing alot in our town. At least 10 people a week (small town) are being sued by them for apparantly the same thing. So am I liable to them as I was to GMAC, if so why is this the first I am hearing about it? I would think they would have had a collection agency or at the very least sent a bill, or something? They arent even showing up on the above mentioned credit report.
Ironically, the dealer's motto is "Teeter the cheater, cheats you for less"...no I'm not kidding.

My line of defense in this matter, was going to be that since the dealer has already written this off as a bad debt on their taxes, so they have been compensated. I get the feeling by your reply that I'm going to be liable nonetheless, though?

 

[JETX]

You are still liable for the debt. It doesn't matter what the dealer did as far as his taxes, or his writing the debt off.

A lot of people don't understand the term "write off". It does NOT mean that the debt or obligation is expunged or deleted. It is purely an accounting term to show that the debt has been moved from the "performing" side of the balance sheet, to the "non-performing" side.

I would suggest you contact the dealer or their attorney to clarify how the dealer has the right to take action against you, considering that GMAC (not the dealer) was the lender. It may be as you state, that either GMAC charged the loss back to the dealer, or the dealer purchased it back. In any case, the debt would normally be owed to the lender.

And here is a scary thought for you... a lot of creditors are filing 1099-misc forms against debtors who do not pay their debt. After all, it is just like income (money or value given to you and not repaid) as far as the IRS is concerned.