How common is it for a car to be levied and sold for an unrelated debt? What is a reasonable settlement for $16,000 debt?
We're in Georgia. How common is it for an automobile to be levied and sold for an UNRELATED debt (a domesticated foreign judgment of my wife's from eight years ago)? Also, what would a reasonable settlement be for a $16K total debt consisting of $7K principal and $9K interest -- specifically an unpaid auto lease in this case? She has no assets other than the car, and low wages at the moment?
First, let me say that I am not licensed to practice law in Georgia, and I would recommend that you bring all of the documentation related to the lease and any letters you and your spouse received from collection agencies regarding this debt to a Georgia attorney. He or she has knowledge specific to Georgia law, and may find additional relevant facts in your documents that make the following observations incorrect.
My second reaction is to ask your attorney to look at the statute of limitations (SoL) on the debt. All states have a body of statutes in their codes of law called, "Limitations of Actions," commonly referred to as the statutes of limitations. The idea behind these laws is that we as a society have decided that we don't want old debts hanging around forever -- we want people and businesses to be able to move on with their lives without worrying about being sued. The length of time a creditor has to sue you depends on your state of residence and the type of debt. For example, many states allow longer for creditors to file suit to collect on closed ended consumer loans than on credit card debts. Most states give credit card issuers three to four years to file suit after default, but some states allow as many as 10 years.
If a creditor files a lawsuit after the allowed time, the court will usually throw the case out and not allow the creditor to file suit again (called dismissed with prejudice). However, you must raise the issue of expired statute of limitations in a written response to the lawsuit, or else the court will not know that the statute of limitations has expired.
The SoL in Georgia is four years. If the last activity, usually the date of last payment, on the account was more than four years ago, then it will be impossible for the creditor to obtain a judgment if your spouse raises the SoL issue in a timely manner.
I encourage you to review your credit report carefully to make sure that the dates of last payment being reported on these accounts are correct. Some creditors, especially debt purchasing firms, will report inaccurate charge-off dates to extend the amount of time an old account appears on your credit report. See the following Bills.com page for more on state collection laws.
Third, assuming for the sake of argument that the SoL has not tolled, it is possible for a creditor to ask a court for a judgment that orders the defendant to surrender or sell property to satisfy the debt. However, each state offers exemptions for personal items that are out-of-bounds for creditors to touch.
In Georgia, a debtor can exempt an automobile that $3,500 and less in value. How common such a judgment occurs is really irrelevant -- you have to assume the creditor is ruthless and will take all legal actions at his or her disposal.
Finally, regarding an offer of settlement, do not make an offer until the SoL question is answered. More than half of the amount due is interest and fees, which oftentimes are cannon fodder in settlement negotiations. Take the position of ignoring them and focus on the original balance due. See this article for tips and tactics on on debt negotiation.
I hope this information helps you Find. Learn & Save.
Struggling with debt?
Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q3 2023 was $17.291 trillion. Auto loan debt was $1.595 trillion and credit card was $1.079 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
The amount of debt and debt in collections vary by state. For example, in Louisiana, 37% have any kind of debt in collections and the median debt in collections is $1729. Medical debt is common and 18% have that in collections. The median medical debt in collections is $726.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.