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Liability for Deficiency- Trailer Repossessed

Question: I had a travel trailer repossessed. I was behind 4 months. I had been paying for this trailer for 8 years, and had no problems making payments until a recent slowdown at my job. I was working with the loss mitigation department from the same bank, trying to get the situation solved by making extra payments, when they picked the trailer up. They sold it at auction, and got $4,000.00 for it. They claim that I owed $7,000.00, and want me to pay the $3,000 difference. Am I liable for the $3,000.00? The loss mitigation department never communicated the fact that I was trying to get caught up with the loan department. Do I have a leg to stand on if they take me to court?

Answer: This is a common complaint that we hear. Whether you are liable depends on whether the loss mitigation department misled you into believing that you would have time to catch up. People should document payment arrangements of this nature in a letter sent to the bank and strictly comply with the payment arrangements. If the repossession was wrongful you may be entitled to get out of paying the $3,000 and/or recover substantial damages. In addition, you should have an attorney review the notices you received after the repossession, as improper notice may have the same consequences. In Illinois, there are two or three notices which must be sent to you promptly after a vehicle is repossessed: (1) a notice of the proposed transfer of title, to which you can object and require the creditor to get a court order resolving whether it has a right to repossess; (2) a notice of the proposed sale of the vehicle; and (3) if you have paid more than 30% of the payments (counting any down payment and tradein allowance in both the numerator and denominator), and the vehicle has not previously been repossessed, a notice of your right to reinstate the contract by making up the back payments and paying repossession expenses and curing any other default.