What rights do I have if I surrendered my vehicle and am being charged for the loan amount? 6 Answers as of December 19, 2011

You are liable after a voluntary surrender for the difference after they sell the car at auction. You would have to file bankruptcy to discharge the debt and prevent any garnishment to your salary.

Ordinarily you would be responsible for the balance between what you owe and what the car was sold for (usually at auction). However, if you were induced to surrender the vehicle based on a promise by the lender, you may have grounds to contest the collection. You will be in for a fight and will need to prove the promises made by the credit union. Depending on the amount of the debt, you may want to consult an attorney. Best Wishes.

You should thoroughly review the purchase and loan documents with an attorney to see what your rights and defenses are in this case, especially if your vehicle was giving you many problems (warranty and Lemon Law issues). An attorney can also help you negotiate a settlement with the loan company so you may not have to pay the full balance owed.

You have a couple of issues to address. 1) The action on the car is called a deficiency action which is the amount owed after the auto is sold or scrapped. This will include the loan amount as well as any other costs associated with the storage, towing and sale of the car at auction. 2) If the car was in such bad condition you should have utilized the consumer protection laws in your state to get the car repaired or to get a replacement vehicle or at the very least to contest the validity of the purchase. This would have put you in a much better position to contest the loan.

Although they may be justified in deducting some amount from the value of the car that you surrendered, due to depreciation, the creditorcannot persist in collecting the full balance of the loan, if you have returned the vehicle. They have an obligation to "cure" the default. In other words, they must apply the value of the vehicle to the overall amount that you allegedly owe and cannot have both the car and the full amount that you loaned. Secondly, and very importantly, a creditor cannot legally garnish your wages without first obtaining a court judgment against you and filing a garnishment order with the court. The creditor may be trying to sidestep the correct process and trying to access your wages when they are not entitled to be doing so. An attorney would be able to ensure that your wages are not being illegally garnished and that the creditor isnot trying to collect an outrageous amount of money from you. It is possible that the creditor will try to take advantage of you if you are unrepresented and are not fully aware of the relevant laws, including theFair Debt Collection Act. I hope this helps, to some extent at least.

Unless you have something in writing that an agent of the lender release you from the deficiency, you will have to pay the deficiency amount. Once the lender sold the car and applied the proceeds, you are responsible for any amount still owing. You could file bankruptcy to discharge that liability or come to an arrangement with the lender regarding payment.