bankruptcy lawyers in memphis tn | Darrell Castle & Associates

By: Darrell Castle

When you don’t make your car payments, the bank can threaten to come and take your car away. And eventually, they will if the debt isn’t handled.


You can do one of two things when you find yourself in that situation.

1. You can try to stop the car repossession by filing for bankruptcy.

2. You can allow the car to be repossessed.

Let’s talk about option 2. Why would someone let their car be repossessed?

Some people realize they just flat out can’t afford to make the payments on their car. So instead of playing a cat and mouse game of constantly trying to avoid a repo, they go ahead and surrender it in order to downsize to something they can afford.

But just because you choose to surrender your vehicle — and its payments — doesn’t necessarily mean you won’t owe anymore money on it. Actually, you probably WILL owe money.

What’s a Deficiency Balance?

When your car is repossessed, it’s then turned around and sold in auction — typically to an auto dealer. And it’s usually sold for less than you actually owed on the car. The remaining balance is called the “deficiency balance.” And you’ll be responsible for paying that.

I talk more about that in this video: