When a deficiency balance is owed, the lender can take certain steps (including legal action) to claim the remaining debt. You may be asked to pay your deficiency balance in a lump sum, but if you don’t have the money, you can try working with the lender and come up with an affordable repayment option.

What is a deficiency balance on a car loan?

When a vehicle is repossessed, or a property goes into foreclosure, it can result in a deficiency balance. This is the amount of the original loan that remains unpaid after the lender has taken back the property and sold it to cover the bulk of the loan balance.

Can you make payments on a deficiency Judgement?

You can pay the deficiency in full, make payment arrangements with the lender to pay the debt over time, or negotiate a settlement. In some cases, it might be best to do nothing; in others, you might want to consider bankruptcy.

Do Judgements ever go away?

Renew the judgment Money judgments automatically expire (run out) after 10 years. If the judgment is not renewed, it will not be enforceable any longer and you will not have to pay any remaining amount of the debt. Once a judgment has been renewed, it cannot be renewed again until 5 years later.

How long does it take for a repossession to come off your credit report?

A repossession takes seven years to come off your credit report. That seven-year countdown starts from the date of the first missed payment that led to the repossession. When you finance a vehicle, the lender owns it until it is completely paid off.

Can a lender collect a deficiency after a Reposession?

In most states, the lender can try to collect the deficiency from you. Some states restrict the lender’s ability to collect a deficiency under certain circumstances. Those circumstances rarely apply in car repossession cases, though.

Do you still owe the deficiency if your car is repossessed?

If your car lender repossesses your car, truck, van, motorcycle or other vehicle, you may not be off the hook financially. If your car was underwater (you owed more than it was worth) you’ll likely still owe money to the lender, called a deficiency.

How long does it take to make a car Reposession settlement?

The settlement will likely need to be made in a lump sum, and many lenders will expect payment within ten days to two weeks. The disadvantage to this option is that you’ll have to come up with a lump sum of money.