Everyone knows that you have to pay for the products that you purchase. Some you pay for with cash (or cash equivalent- checks, debit cards, etc). Some you pay for with credit- credit cards, loans, etc.
The “story” of a cash purchase ends there. You have paid for it, it is yours.
The “story” of a purchase made with credit does not end there. If you don’t pay the lender back, they have the right to repossess the thing you bought. The most common examples are cars and houses. Theoretically, your credit card purchases at Best Buy are in the same category, but not always.
In the case of a car loan, there are specific rules the lender must follow. These rules are governed by Virginia Code’s version of Revised Article 9 of the Uniform Commercial Code, codified at VA Code sections 8.9A-100 through 8.9A-709.
When a car loan is defaulted, they have the right to repossess, but they must give you certain notices. They must tell you that they are going to sell the car, and how long you have to get the car out of “hock”. They must tell you that if the car is sold, that you will be responsible for any short fall (“Deficiency balance”), and that if there is an overage (“Surplus balance”) that you will get that amount back (surpluses are very rare). After they sell the car, they must send you an accounting, and tell you how much the deficiency or surplus balance is.
If they don’t there are 2 consequences. The first is the one that is most important- you are not responsible for any deficiency. The second is that you have the right to sue them for the entire amount of the interest charge, plus 10% of the principal. VA Code 8.9A-625[c]. You are not entitled to attorney fees and costs.
This includes when a car dealer sells a car, and fails to obtain financing. The Virginia Supreme Court recently held Victory Nissan of Chesapeake to that in Cappo Management V, Inc. v. Britt., and awarded damages to Ms. Britt.
This is common in yo-yo sales. If you are the victim of this kind of abuse, you do not need to file for Bankruptcy protection. Let us help turn the tables on the collectors for you.
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Krumbein Consumer Legal Services, Inc.
5310 Markel Rd. Suite 102
Richmond, VA 23230