How to Deal With Owing a Deficiency Balance

Financial strains can happen to anyone due to job loss, medical problems or just too much debt. This can lead to repossession or foreclosure. Many times the lender cannot get as much as you owe for the property. Work with your creditor to make payment arrangements on your remaining debt called a deficiency balance.

Instructions

1

Contact your lender right away if you are experiencing financial problems. Most lenders want to help you through the difficulties; not repossess your vehicle.

2

Offer to return the vehicle as a voluntary repossession as a last resort. This can save you the repossession costs.

3

Redeem the vehicle if you are able to afford the costs. Most companies will give you a time frame to get the account up to date including the repossession fees.

4

Find out what is still owed after the vehicle has been sold. Most finance companies sell vehicles at auction, so the amount they receive for the vehicle is usually low.

5

Discuss with your lender payment arrangements for the deficiency balance. Some lenders will even refinance the balance.

6

Keep your payment arrangements with your lender. Some states allow lenders to sue for the balance which means they can garnish up to 25 percent of your wages for the balance or put a lien against a home you own.

7

Use bankruptcy as a last report. A deficiency balance can be forgiven as part of a bankruptcy.