Can a lender obtain a deficiency judgment on a voluntarily repossessed RV?

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Can a lender obtain a deficiency judgment on a voluntarily repossessed RV?

I purchased an RV together with my wife. When we found we were unable to afford the payments, we tried to sell the RV at consignment. We had an offer for $49,000, which the lender rejected. We eventually returned the RV voluntarily to the lender, who sold the RV at auction, receiving considerably less than the $49,000 offer we had earlier. Now the lender is seeking a deficiency judgment against us for the loan balance remaining after the auction sale. Is this legal in CA?

Asked on October 28, 2010 under Bankruptcy Law, California

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Yes, unfortunately it is legal. Unlike mobile homes, RV's are treated as motor vehicles under the law.  Accordingly you can be sued for any shortfall on the re-sale and a deficiency judgment can be obtained against you.  However, if your creditor didn't follow the rules regarding the sale of repossessed vehicles but sued and got a judgment that it was not legally entitled, you have rights under the law. In such a case you may not be required to pay the judgment.  For example, the sale of your repossessed vehicle must have been "commercially reasonable". If it was not, then you are not responsible for the deficiency.

At this point, you need to speak directly with an attorney in your area.

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Yes, unfortunately it is legal. Unlike mobile homes, RV's are treated as motor vehicles under the law.  Accordingly you can be sued for any shortfall on the re-sale and a deficiency judgment can be obtained against you.  However, if your creditor didn't follow the rules regarding the sale of repossessed vehicles but sued and got a judgment that it was not legally entitled, you have rights under the law. In such a case you may not be required to pay the judgment.  For example, the sale of your repossessed vehicle must have been "commercially reasonable". If it was not, then you are not responsible for the deficiency.

At this point, you need to speak directly with an attorney in your area.


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