How long does a creditor have to collect after a car has been repossessed?

Answer 1

In the US, the FDCPA (Fair Debt Collections Practices Act) regulates this nation wide. The individual states may have legislation also that addresses this, but they may only make the regulation tighter or more stringent, not looser.

Under the FDCPA the creditor has seven (7) years past the date of last payment to recover on a debt. If they seek judgment and this is granted, they have ten (10) years, and can motion the courts (often successfully) for an additional ten (10) years to collect. This is also from the date of last payment.

In the case of repossession or foreclosure, these acts can be construed by the courts as the date of last payment.

Here's a possible scenario that may help to explain:

Say you purchased a car in July 1999. You made payments until you lost your job in November. Your last payment was 1 November 1999. The vehicle went up for repossession in December, and the agency recovered the vehicle 1 January 2000.

The lender now has until 31 December 2007 to collect on the outstanding debt, all the while assessing further fees and interest.

Now, on 1 December 2007, say the lender gets tired of trying to collect the debt, so they file for judgment. On 31 December 2007, the lender is granted this judgment, and now has until 30 December 2017 to collect.

For the next ten years, they may make several efforts to recover the owed amount, but are never able to secure the balance. There is still going to be a balance owed on 30 December 2017. The lender can now go back to the courts and petition for an extension. Say it is granted, as is often the case. Now the lender has until 29 December 2027 to collect. A total of 27 years. during this time, every action taken by the attorney of the lender, every collection attempt made for which a fee is charged, every activity on the account that can be assessed some sort of fee is gowing to cause this debt to grow. A simple $1000 debt can grow to monsterous proportions within that 27 years.

Word of advice, find a way to file chapter 7 bankruptcy before it goes to judgment.