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Advice on Wage Garnishment on Account of a Repossession Balance

Mark Cappel
UpdatedApr 1, 2024
Key Takeaways:
  • Understand the effects of car repossession.
  • Learn about how long a judgment can be enforced.
  • Consult with a bankruptcy attorney, as a way to stop a garnishment on your wages.

Will a 7 year old balance on my repossession, still effect my credit?

Hi, About 7 yrs ago, I bought a car for my sister. She lost her job and could not make the payments. I refused to make any of the payments for her, hoping she would get a job soon...but the car got repossessed. The car was in my name only. The lender is Ford Motor Credit. They successfully garnished my wages for a brief amount of time, but I switched jobs. Now they have sent an audit to my current employer. My question is this: Since it has already been about seven years, would it even be worth it to file bankruptcy? Or would filing bankruptcy only make my credit worse and extend the amount of time I have suffered derogatory credit? Also, if it is discouraged for me to file bankruptcy, what other alternatives do I have to get avoid wage garnishment?

Thank you for your question about car repossession and its effects on your credit.

Repossession usually leads to a deficiency balance

When a vehicle is repossessed, the lender will sell the car at auction and apply the sale price at auction to the amount that you still owe on the original car loan. If the auction does not net enough money to cover the full balance of the note, which it rarely does, then the original borrower would owe the difference, called a deficiency balance, to the lender. The creditor can collect on the deficiency balance like any other unsecured debt, up to and including filing a lawsuit against the borrower. In your case, since Ford Motor Credit has garnished your wages, I assume that it filed a lawsuit and obtained a judgment for the deficiency balance owed on the vehicle. Once a judgment has been obtained, bankruptcy is one of the few definitive ways to prevent the creditor from proceeding with executing on the judgment, which can include wage garnishment, property liens, and bank levies.

Communicate directly with the creditor

The creditor may be willing to work with you to establish a repayment plan which you can afford, to help you avoid bankruptcy. If you want to try to repay this debt and prevent further collection efforts by the creditor, I would encourage you to contact the creditor to discuss possible repayment arrangements. Ford Motor Credit may be willing to forgo further judgment execution if you can commit to reasonable regular monthly payments. However, if you cannot, or are unwilling to, make payments, it is likely that the creditor will continue to try to execute on its judgment, in which case a bankruptcy filing may be your best option.

How long can a judgment be enforced?

The length of time that a judgment can be enforced varies from state to state, but in most cases it is significantly longer than seven years. For example, in several states, judgments are valid for twenty years from the date of entry, plus they can be renewed twice if the judgment creditor chooses to renew them, meaning that the judgment can actually be collected for up to sixty years. Again, the length of time that judgments are valid varies from state to state, so if you think that you may be reaching the outside limit for the collection of judgments in your state, I would encourage you to consult with an attorney to discuss your stateÂ’s law regarding judgments. For more information about how long judgments can be enforced in your state, you should read this article about judgments and credit reports.

Consider filing bankruptcy

Given the length of time the creditor can enforce its judgment, and the fact that it is again trying to garnish your wages, a bankruptcy filing may be the best solution to resolve this debt. However, many factors must be considered before deciding to file bankruptcy, such as your income, your assets, your expenses, and your future plans. I strongly encourage you to consult with a qualified bankruptcy attorney in your state to help you determine if bankruptcy is a practical solution to your financial troubles. While it is true that bankruptcy will appear on your credit profile for ten years from the date of discharge, you may find that the benefits of ridding yourself of this debt outweigh the negative impact that filing for bankruptcy protection is likely to have on your credit rating. For more information about bankruptcy, I encourage you to visit the Bankruptcy page.

As I mentioned previously, I strongly encourage you to consult with an attorney to determine what action this creditor can take against and if bankruptcy is a viable solution. I also invite you to visit the Debt Help page for more general information and suggestions about how to deal with mounting debt.

I wish you the best of luck in resolving this outstanding account.

I hope this information helps you Find. Learn & Save.



Dealing with debt

If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2023 was $17.503 trillion. Student loan debt was $1.601 trillion and credit card debt was $1.129 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

Each state has its rate of delinquency and share of debts in collections. For example, in North Dakota credit card delinquency rate was 3%, and the median credit card debt was $474.

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.



CChristina Sutton, Oct, 2020

Hello I'm trying to get a balance of what is still owed on my garnishment I've been paying on this for years. The paper I get from my employer always shows same balance nothing changes where is my money going?

DDaniel Cohen, Oct, 2020

Christina, I believe that your employer would have a record of the original order for garnishment which should have a balance. Interest can continue to accrue after a judgment. The amount of interest is set by the state. You can find the rate allowed in your state by searching for "post-judgment interest" and the name of your state. Your employer should also have a record of all the money sent to your creditor.

If dealing with your employer's payroll department is going to cause problems, try reaching out to the creditor directly. Ask for a statement on your account that shows the debt and the payments you've made.

BBill, Sep, 2010
The first step I would take is to speak directly with the lender to hear what options the lender presents you. You are correct that you would be liable for any deficiency balance, were the car repossessed. I cannot tell you definitively, but it does not seem that the car qualifies as stolen, if she is one of the owners. In your position, I would seek a free consultation with an attorney, to see what recourse is available. Here is some helpful advice on how to find an attorney.
JJonathan, Sep, 2010
I am in a situation that's leading towards the repo consequences of the original question. My situation: 1) I am the primary on the loan for the car. 2) The person (co-signer) paying for the car has stopped paying. 3) There are 2 names under the CA DMV registration. 4) The second person on the loan has the car in their possession and I don't know where they are. I wanted to know my options. What I have researched so far is: 1) They creditor repoes and I have to pay deficiency balance. 2) How do I get the car in my possession? Can I call the police to report the car stolen even though she is under the registration? Then take the car and restore the loan to be current. Any advice would be helpful. Thank you. Jonathan
BBill, May, 2010
You are paying the deficiency balance. Please reread the first paragraph of the main answer above for the definition of a deficiency balance.
KKaren, May, 2010
If I am being garnished for a repossessed car, how come I don't get the car after paying over $10,000 for it?
BBill, Feb, 2010
The reason you are being garnished may have nothing to do with the mileage on the vehicle. What has happened here is that failure to make payments on a vehicle can result in a repossession. When a vehicle is repossessed and auctioned off it is sold to the highest bidder. This usually results with the auctioned price being much lower than the market value of the vehicle. If you believe your rights have been violated in some way I encourage you to speak with a licensed attorney in your state. Please read an article I wrote, voluntary repossession.
JJen, Feb, 2010
We had a car repoed in 2007. My husbands pay just began getting garnished. When we purchased the car the dealership lied to the bank about how many miles were on the car. My bank papers say one amount and the title and dmv show another. Is there anything we can do to stop the garnishment due to this? We live in NYS
BBill, Feb, 2010
The statute of limitations no longer applies once wage garnishment begins.
ccarissa, Feb, 2010
does the statute of limitations start over after they have garnished your wages?