When you bought the vehicle you got a loan. The security for the loan is the vehicle. Under the contract if there is a default in the payments the lender has the right to take possession of the vehicle.

Buyers often get what is called seller-assisted financing. Frequently they do so without ever knowing what they are getting or what they have agreed to. Then weeks or even months after the purchase the dealer calls telling them the financing did not go through and they have to bring back the vehicle.

As a general rule, you have far more rights with a sale than with a lease.

In California after your car or truck was sold, the finance company charged you a deficiency on the balance of the contract. They also reported the deficiency to the Credit Reporting Agencies. To be entitled to a deficiency, they must send a proper Notice. Years later, when they cancel that deficiency or debt, they may notify the IRS of the cancellation and it gets reported as “income” to you. If the notice they sent you after the repossession was defective, then you never owed the deficiency and there was no debt to cancel. There should have been no report of "income" to the IRS, because you never owed it.