The bank repossessed my car but never sold it. Do I still have to repay the loan?
If your car loan lender doesn't sell your car after repo, it probably cannot collect a deficiency judgment against you.
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If your car is repossessed and you never got a notice of the car sale, then the bank either (1) sold the car but failed to notify you, or (2) never sold the car. Either way, it's likely that the car loan lender will be prohibited by law from pursuing you for the balance of the car loan.
(To learn more about car repossessions, see the articles in our Car Repossessions topic area.)
The Bank is Required to Give You Certain Notices
A creditor is required to give you written notice before it sells the car either at a private sale or auction. At a minimum, you should be notified of a sale. See, Required Notices in Car Repossessions. If the creditor did not send you any written notices about what it has done with the car, then either it sold the car without telling you or it decided to keep the car.
What Happens if the Bank Sells the Car Without Notice?
If a creditor fails to provide written notice of the sale (or certain other notices), then it may be prohibited from suing you for a deficiency judgment. (To learn what this is see, Car Repos and Deficiency Judgments.) If the bank does sue you for a deficiency judgment in this situation, you can raise the lack of notice as a defense to that lawsuit. If you can prove that the bank did not give you notice of the sale, then the court may refuse to grant a deficiency judgment to the creditor. See, Defenses to Car Repo Deficiency Lawsuits.
The Bank Did Not Sell The Car
If a creditor repossesses your car, but chooses to keep it rather than sell it, then the law considers to creditor to have taken the car in satisfaction of the debt. The bank may not then sue you for the balance of the loan. Otherwise, that amounts to what is called a double recovery. If the creditor keeps the car but then sues you on the balance of the note, you can raise this as a defense. See, Can a Car Lender Collect Deficiency After Repo.