What happens after The Repo Man leaves?
Q. My boyfriend was a manager in a small inventory co with a couple of cars in their fleet. The company went bankrupt. My boyfriend took over thepayments on his car and gave them the info to repossess the other car. The bank is now coming after him for the balance. We thought if the car was repossesed, that would be the end of it. Can you help?
A. Your question highlights the hazard of trying to answer something without having enough information. Don't get me wrong; I'm not asking you to elaborate. It's just that there are so many possibilities based on the few facts you gave me that there's no single correct answer I can give you. But let's take a shot with some general information.
Ordinarily, if you buy a car and finance it, you have to make monthly payments to the bank that lent you the money. You can usually miss one, or even two payments before the bank gets irritated. However, if you miss too many payments, the bank will send the repo man out to your house and he'll come and snag your car.
You should understand that repossession is usually a remedy of last resort because, really, what is the bank going to do with your car? The bank doesn't drive, and its employees have their own cars. The bank would much rather have you making regular payments because that's how the bank makes its money. But, the bank isn't going to let you slide forever, which is why it has repo men to contact.
Once the repo man gets the car from you, you usually don't have to make any more payments to the bank for any upcoming payments. However, you do owe the bank for payments that you missed. Why? Well, you signed a contract saying you'd make them, and banks are notorious for enforcing those types of agreements. So the bank will come after you for those payments. In addition, after the bank gets the car back from the repo man, it will auction it off. If the bank doesn't get enough money from the sale of the car to pay off your loan, the bank will come after you for the difference between what the car sold for at auction and what you still owed to the bank. This, too, is usually spelled out in the financing agreement with the bank. So, whatever payments you missed, plus the difference between the sale price and the loan balance, equals the amount you would owe the bank. (That number could be negotiated if you could come up with a lump sum -- maybe the equivalent to 50 cents on the dollar -- that the bank would be willing to accept.)
How does all of that apply to your boyfriend's business? Well, that all depends on his involvement with the business. Was he simply an employee, or was he a part owner? Was the vehicle in his name, or in the company's name? Was the company a corporation, a partnership, or a sole proprietorship? If he was simply an employee, with no involvement in the repossessed vehicle except that he got to drive it as a company car, it's unlikely that the bank could legally pursue him personally for any balance due on the car. Of course, the bank would then be entitled to possession of both cars, including the one your boyfriend is driving. If, on the other hand, your boyfriend was a part owner of the company, or otherwise signed some sort of agreement under which he's personally liable for payments on both cars, then he's liable for missed payments and any shortages after the auction, as I explained above.
Your boyfriend should consider consulting an attorney to review all of the paperwork involved here, especially with the mixed bag of bankruptcy law, the repossession, and the bank's attempts to pursue your boyfriend personally.
Best of luck.
A. Your question highlights the hazard of trying to answer something without having enough information. Don't get me wrong; I'm not asking you to elaborate. It's just that there are so many possibilities based on the few facts you gave me that there's no single correct answer I can give you. But let's take a shot with some general information.
Ordinarily, if you buy a car and finance it, you have to make monthly payments to the bank that lent you the money. You can usually miss one, or even two payments before the bank gets irritated. However, if you miss too many payments, the bank will send the repo man out to your house and he'll come and snag your car.
You should understand that repossession is usually a remedy of last resort because, really, what is the bank going to do with your car? The bank doesn't drive, and its employees have their own cars. The bank would much rather have you making regular payments because that's how the bank makes its money. But, the bank isn't going to let you slide forever, which is why it has repo men to contact.
Once the repo man gets the car from you, you usually don't have to make any more payments to the bank for any upcoming payments. However, you do owe the bank for payments that you missed. Why? Well, you signed a contract saying you'd make them, and banks are notorious for enforcing those types of agreements. So the bank will come after you for those payments. In addition, after the bank gets the car back from the repo man, it will auction it off. If the bank doesn't get enough money from the sale of the car to pay off your loan, the bank will come after you for the difference between what the car sold for at auction and what you still owed to the bank. This, too, is usually spelled out in the financing agreement with the bank. So, whatever payments you missed, plus the difference between the sale price and the loan balance, equals the amount you would owe the bank. (That number could be negotiated if you could come up with a lump sum -- maybe the equivalent to 50 cents on the dollar -- that the bank would be willing to accept.)
How does all of that apply to your boyfriend's business? Well, that all depends on his involvement with the business. Was he simply an employee, or was he a part owner? Was the vehicle in his name, or in the company's name? Was the company a corporation, a partnership, or a sole proprietorship? If he was simply an employee, with no involvement in the repossessed vehicle except that he got to drive it as a company car, it's unlikely that the bank could legally pursue him personally for any balance due on the car. Of course, the bank would then be entitled to possession of both cars, including the one your boyfriend is driving. If, on the other hand, your boyfriend was a part owner of the company, or otherwise signed some sort of agreement under which he's personally liable for payments on both cars, then he's liable for missed payments and any shortages after the auction, as I explained above.
Your boyfriend should consider consulting an attorney to review all of the paperwork involved here, especially with the mixed bag of bankruptcy law, the repossession, and the bank's attempts to pursue your boyfriend personally.
Best of luck.
posted by David Kendall at
5:19 PM
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