If you become delinquent on your car loan or lease payments in Maryland, and you cannot reach an agreement with your lender or lease company to bring your account current, your creditor may choose to repossess your vehicle. Repossession in Maryland does not automatically relieve you of your car loan debt, and in some cases, repossession may also lead to garnishment of your wages.
Deficiency
After a creditor repossesses your vehicle, it must give you 15 days to reclaim the vehicle under Maryland law. To reclaim the car, you must pay the lender or lessor the full balance of the loan or lease, as well as any costs incurred by the creditor for repossessing and storing the vehicle. If you do not reclaim the vehicle, the creditor typically sells it at a public auction; however, the sale price may not cover your loan balance and repossession costs. Any money you still owe after the creditor applies auction sale proceeds to your loan balance is called a deficiency.
Legal Action
If your loan or lease contract permits, the creditor may initiate collection activity to recover the deficiency balance from you. If you do not pay the deficiency voluntarily, the creditor may sue you in a Maryland county court. Unless you can prove that you have paid the deficiency balance, the court will likely enter a judgment in favor of the creditor, making you legally liable for paying the deficiency.
Maryland Wage Garnishment
After your lender or lessor obtains a judgment from a Maryland court, it may petition the court for a writ of garnishment, which authorizes the creditor to contact your employer and demand a portion of your earnings. Your employer must withhold part of your wages from your pay and send these funds to the court that issued the judgment. The court will forward the funds to your lender or lessor for payment against your judgment deficiency balance. Garnishment typically continues until the deficiency is paid in full.
Garnishment Limitations
Under Maryland and federal law, a judgment creditor cannot take all of your earnings to pay against your judgment deficiency. Maryland limits garnishment to the lesser of 25 percent of your post-tax earnings or the weekly amount you earn over 30 times the federal minimum hourly wage. For example, if you earn $800 per week, your creditor can take $200 from each week's pay. However, if you earn $250 per week, and the federal minimum wage is $7.25 per hour, the creditor may only take $32.50 each week ($250 - $217.50, with $217.50 representing 30 times the minimum wage).
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