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Auto Finance Litigation: The Art of Auto Collections

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The full scope of a creditor’s rights in auto finance litigation can be confusing, so we are here to break it down in its simplest terms so you can find the help you need and decide which course of action is best for each delinquent account at your institution. Whether you are a lender in the middle of a payment dispute with a customer or a bank ready to bring suit against a borrower, you are in the right place. 

What is Auto Finance Litigation?

Auto finance litigation involves any number disputes that may arise over the course of a vehicle loan. Some of the most common examples include disagreements over loan amounts, repayment terms, repossessions, and subsequent auction sales. Generally, these issues begin when a borrower fails to pay back the required amount under their lending agreement. If a simple collection letter does not resolve the issue, it may be time to take legal action. These come in a variety of forms, but the three most common auto finance litigation cases are lawsuits for: 

  1. Money damages;
  2. Deficiency judgments; and 
  3. Writs of replevin

Hiring a lawyer to help with these different types of auto collections can ensure you are repaid for the outstanding loan debt expeditiously and in entirety, plus any interest, late fees, court costs, and attorney’s fees that may have accrued in the interim. Because businesses cannot represent themselves pro se in the State or Superior Courts of Georgia, hiring a licensed attorney to file any of these actions is essential – as any improperly filed actions will be rejected and delay the collections process.

The Three Most Common Types of Lawsuits with Auto Collections

  1. Money Damages 

In the simplest terms, a lawsuit for money damages is an action seeking reimbursement or compensation. In the case of auto collections, money damages are sought to compensate you, the bank or lender, for the outstanding balance of the borrower. An attorney can help you recover money damages by filing suit against the debtor to obtain a money judgment.

  1. Deficiency Judgments

What if the bank already repossessed and sold the vehicle and an amount still remains due and owing on the borrower’s account? This amount is known as a deficiency and can be pursued if certain statutory steps are taken. 

When a borrower’s account goes into default, the bank or lender may repossess the and sell vehicle that secured the loan to recover the debt. When the property sells for less than the entire debt of the loan, there is a deficiency remaining on the account. 

In the world of auto collections, an action for deficiency judgment would be relevant if the bank or lender repossesses the car, and then sells the vehicle at auction. If the sale of the vehicle does not cover the entire amount of the debt, then the bank is able to sue to collect the remaining balance owed as long as certain steps are taken (including a 10-day notice of borrower’s right to redeem sent immediately upon repossession and that the sale of the collateral is commercially reasonable i.e., is not sold to an employee of the bank for an unreasonably low amount that is essentially a gift).  

  1. Writs of Possession/Replevin 

The third most common type of auto collection action you might see is a writ of possession, also known as a replevin. Writs of possession are different from deficiency judgments because they are court ordered when the property in dispute is unable to be repossessed without breaching the peace. Once a vehicle is repossessed through sheriff intervention and sold to satisfy the debt, a deficiency judgment may be necessary.

While it is also common for people to think of repossession and writs of possession/replevin as the same actions, there are a few key differences to keep in mind. First, unlike regular repossession, a replevin action requires legal process and court intervention. Often, creditors prefer repossession because it is easier, entails fewer legal formalities, and if often cheaper than filing a writ of replevin. However, in certain circumstances where repossession is not possible, may result in a breach of the peace, or the vehicle simply cannot be located, it will be important for you to hire an attorney to advise and assist in the filings for the replevin process to ensure legal compliance. 

In auto collections specifically, a writ of replevin may be issued when a borrower on an auto loan misses too many payments on the vehicle for which the loan is attached to. The bank or lender can file a writ of replevin with the court to repossess the car. The court will then order a sheriff to assist in the repossession of the vehicle if it is otherwise unable to be repossessed. Some common examples of when a writ of replevin would be the best course of action for you include:

  • When the vehicle is locked in a garage or other secured location
  • When the vehicle is hidden or missing 
  • When repossession of the vehicle is questionable or may not be allowed without a court order
  • When repossession of the vehicle without a court order and assistance of a sheriff would result in a breach of the peace such as disturbance of third parties, the possibility of violence, or damage to property in process of repossessing the vehicle

If you are facing any of these circumstances where a writ of replevin is necessary or need assistance in collecting on deficiency judgments or money damages, it may be time to contact an attorney for help. 

When to Hire an Attorney for Help 

As with any dispute, it can sometimes be difficult to know exactly when it is time to hire an attorney for assistance in resolving the issue. If you are a regional bank in or outside or Georgia that needs help in recovering auto collections, it may be time to schedule a free consultation with an attorney.

To ensure that the firm you hire can meet your needs, you will want to look for one with knowledge and experience in auto collections, specifically with recovering money damages, deficiency judgments, and filing writs of replevin. Collections in general can be a time-extensive process, so hiring an attorney that has successfully collected on a variety of different types of judgments in the past will help to guarantee that you will be happy with your results. The Bowen Law Group has extensive experience in each of these collection efforts and is here to help satisfy your auto collection needs. 

How The Bowen Law Group Can Help with All Your Auto Collection Needs

One of the practice areas that The Bowen Law Group focuses in is banking and finance law. Some of The Bowen Law Group’s largest clients include commercial and investment banks, as well as asset-based lenders. From complex litigation to daily operations, the attorneys at The Bowen Law Group have dealt with it all. Collection efforts for commercial banks and lenders follow a strict regulatory framework and having attorneys on your team that understand the complexities will help you to feel confident in recovering the full debt owed to you in a lawful manner. 

The Bowen Law Group attorneys are licensed in both Alabama and Georgia and have the infrastructure to handle all institutional collection matters throughout both of these states in state and federal court. While prioritizing in using their resources and skills to provide exceptional services to you, our attorneys also strive to meet your needs of immediacy and cost-effectiveness. If you are ready to take the next step in getting help for your auto collection needs, contact The Bowen Law Group today. 

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