I bought a car in West Virginia a few years ago. I religiously made my payments for two years. I recently got divorced, however, and have been under financial stress. I can’t afford the car and stopped making payments. When the lender repossessed the car I still owed $12,000 on the car loan. I got a few notices along the way, and ignored them. Yesterday I got a bill from my lender saying I owe $4,700. How can this be? The lender has the car now, not me.
In West Virginia, like all states, if your car is repossessed you may be on the hook for a “deficiency” afterwards. There is one exception – if you owed $1,000 or less on the car loan when it was repossessed, the lender cannot go after you for a deficiency balance.
Read on to learn about deficiency balances in West Virginia.
What Is a Deficiency After Car Repossession?
If you fall behind in your car loan payments in West Virginia, your car lender can arrange to have your car repossessed. When this happens, the car repossession company simply takes your car -- it doesn’t need your permission. (Learn how car repossession work.)
In most cases, the car lender will sell your car either at auction of through a private sale (often to a used car dealer). If the sale price is not enough to cover the remaining balance on your car loan plus the lender’s repossession and auction costs, you will owe the difference – called the deficiency. (Learn more about deficiency balances after car repossession.)
What if the sale proceeds are more than the loan balance? If, on the other hand, the sale proceeds covered both the unpaid loan balance and the lender’s costs, you wouldn’t owe a deficiency. In fact, the lender would have to return any surplus money to you. Unfortunately, this rarely happens in car repossession cases.
West Virginia’s Anti-Deficiency Law
In West Virginia, the lender is prohibited from collecting a deficiency if, at the time of repossession, the unpaid loan balance is $1,000 or less. (West Virginia Code Ann. § 46A-2-119.) As you can imagine, this exception rarely kicks in for car repossession cases. Most people owe far more than $1,000 when their car is repossessed.
When the Car Lender Violates the Law
However, if the lender failed to follow West Virginia rules when it repossessed the car, conducted the sale, or calculated the deficiency balance, you might be able to challenge its right to the deficiency. (Learn more in Can a Car Lender Collect a Deficiency After Repo?)