Your wages can be garnished after repossession, but only if the car was sold or auctioned for less than the amount you owe on your loan, creating a deficiency balance. Even if you owe a balance to the lender, garnishment may be a last resort option.
What happens if I don’t pay the deficiency balance?
If you refuse to pay, the debt will most likely be sold to collections. But either the lender or the collector can choose to file a lawsuit against you, which could result in a wage garnishment, a levy against your bank account or a lien against your other property.
How long does a deficiency judgments stay on credit?
A deficiency judgment will remain on your credit report for 7 years. If you apply for a mortgage, car loan, credit card or other loan, lenders will see this negative judgment until it falls off your report. Your credit score will also suffer if a court files a deficiency judgment against you.
Can a lender garnish your wages if you have a car?
You don’t have a car any longer, but you still owe the money you borrowed. What happens next is up to your lender. If it takes certain legal steps, it can garnish your wages in some cases. The lender doesn’t want your car.
Can a creditor garnish my wages after seven years?
If a debt collector has gone to court and obtained a legal judgment against you, your wages can be garnished until the debt has been repaid. That might be seven months, seven years, or even longer. If you have defaulted on a student loan funded by the U.S. Department of Education, you may receive a notice of wage garnishment.
Can a car lender collect on a deficiency judgment?
Once it has a deficiency judgment against you, the lender can take steps to collect it. If your car lender gets a deficiency judgment against you after car repossession, there are things you can do to protect your income and property from collection. (Learn more about car repossessions and deficiency judgments .) How Can Your Car Lender Collect?
Can you get a wage garnishment for student loan debt?
Federal law provides that your wages (and your social security benefits) can be garnished for back taxes and student loan debt. This means the Department of Education and the IRS can garnish your wages without first filing a lawsuit or getting a judgment.
