We have recently seen an influx of consumers calling about Credit Acceptance
Corp., a creditor that specifically pursues consumers for automobile repossession
debt. The case is often that a friend or family member thinks they are
doing a favor by co-signing on an auto loan. Instead when the payments
are defaulted on and the car is repossessed, that same co-signer who thought
they were being a good friend or family member ends up with the short
end of the stick.
What co-signers don’t know most of the time is that they are just
as liable as the purchaser on whatever it is that they are financing.
The common argument of it isn’t my car or I never even drove it
doesn’t apply as the co-signer takes on the same liability as the
purchaser. With auto-repossession cases in particular, the purchaser defaults
on the payments for long enough when the lender decides to repossess the
car. Then the car is sold at auction, usually for much less than what
it is worth. Finally, the bank or creditor will then pursue the consumer
and co-signer for the deficiency balance of the debt that was not covered
by the sale of the car. A lawsuit is usually filed and a default judgment
obtained. Quite often the co-signer is pursued particularly because they
are in a better financial situation than the purchaser which is why they
were needed in the first place. The purchaser usually has little to no
assets or disappears entirely leaving the co-signer to deal with the matter entirely.
Credit Acceptance Corporation is a creditor that specifically focuses on
auto repossession debt and almost always retains the law firm of Lyons,
Doughty, & Veldhuis to sue consumers and obtain judgments against
them. Judgments open consumers up to wage garnishment, bank levies and
property liens and devastate the consumer’s credit. In New Jersey
these cases are very common and they mostly consist of default judgments
in which the consumer was never aware of the lawsuit.
We have been very successful at having default judgments by Credit Acceptance
and Lyons Doughty vacated based on the poor service of process performed
but more importantly have been able to diminish or expunge the underlying
debt allegedly owed by co-signers through aggressively defending these
actions or through a low negotiated settlement.