What is a deficiency judgement?

After repossessing your car in California, the auto finance company is required to send you a letter, called a Notice. If you have received a letter from your Finance Company following a repossession, fax it to us at 858/270-7710, along with your phone number, and we will review it at no charge.

That letter, called a NOTICE OF INTENT TO DISPOSE OF VEHICLE, or a NOTICE OF OUR PLAN TO SELL YOUR PROPERTY (your vehicle) is very important. It may determine whether the repossession was legal and whether you owe any money to the Finance Company.

A deficiency is the difference between what is owed on the vehicle and what the lender sells it for. Usually the vehicle is wholesaled at an auction and the buyer may be subject to a lawsuit for the balance. The Automobile Sales Finance Act governs the process. It requires the lender to follow a very specific procedure to pursue a deficiency judgment. If the lender fails to follow the statute, the consumer does not owe the money. Save all your documents, including your original purchase documents. Do not throw any of your papers away. If you no longer have the Notice from the Finance Company, or they did not send it to you, send them a letter and ask them to fax or mail you a copy. The finance company has to comply with the repossession law. If they do not, they may have committed "conversion" by selling your car, and they may be liable to you.

The deficiency judgment is the result of a lawsuit. If you get served with legal papers you should immediately contact a lawyer. You will have only 30 days in which to file an answer. If you do not file an answer the court will assume that you have no defenses and you will lose by default. The result maybe that you end up with a default judgment saying a large sum of money that you really do not owe. The repossession and the deficiency judgment will go on your credit report making it difficult to buy another car, get credit, rent an apartment, even get a job. Many employers check credit reports before hiring.

The sale of the car has to be "commercially reasonable". That means that if they don’t conduct a fair sale, then they cannot hold you responsible for the deficiency.

Many lenders sue and get deficiency judgements that they are not entitled to. To find out if this is what is happening to you, call us.

The Automobile Sales Finance Act...

...requires the Finance Company to do the repossession legally. If you have received a letter from your Finance Company after a repossession, fax it to us at 858/270-7710 or you can This email address is being protected from spambots. You need JavaScript enabled to view it., along with your phone number, and we will review it at no charge. Or contact us here with your repossession questions.

San Diego Lemon Law Center | The Law Office of Michael E. Lindsey
Tel: (858) 270-7000 Fax: (858) 270-7710 | 4455 Morena Blvd., Ste. 207 San Diego, CA, 92117 (see map)

General Information Only

The information in the San Diego Lemon Law Center pages is for general information only and is not intended to be taken as legal advice. If you have a specific legal question or problem, please feel free to contact us or you should promptly consult with an Attorney handling such matters in your area for advice.