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LegalGems
LegalGems, Lawyer
Category: Consumer Protection Law
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I have a repossession quesion. I defaulted on a loan with

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I have a repossession quesion. I defaulted on a loan with my HVAC unit. The lender came and repossessed the unit but left the duct work that was installed. At the time the unit was repossessed, it was not working because it had been struck by lighting. I informed the lender that the unit was not working and I had put in a claim with the insurance company. The lender sent papers saying that the unit would be sold but found out that the unit was not in working condition. I went to his office and he told me that the ball was in my court and what did I want to do about the unit? He tried to contact the insurance company to get them to fix the unit and he was told that the claim has already been settled. He wanted to know was I planning on paying him and I told him yes, but I needed until the end of the month to bring him $1000 dollars. He also sent a letter saying the money from the insurance company belong to him. What are my options?

LegalGems :

Hi! LegalGems here. My goal: To Do My Best To Assist You. Please remember, I can only provide general information,as this is a public forum.

LegalGems :

Generally when a person defaults on a loan, the lender can sell the property and then seek a deficiency judgment - which means they can recover from the buyer the unpaid amount that was not recovered from the sale of the property.

Customer:

What about the money from the insurance company? Does that belong to him? He was not on the insurance as a lien holder. He can't sell it without fixing it. If I decide not to get the unit back and he can't sell it, what then?

LegalGems :

No, it would not belong to him in that respect - as a lien holder. But he can bring an action against you for the outstanding balance; if he sells it as is, he could bring an action against you for the difference between money received from the sale, and the outstanding balance on the loan (this would be the deficiency amount).

Customer:

I am not trying to get out of my obligation. However, this unit as I have been told by other HVAC repairmen, that if this unit was struck by lighting, the entire unit will need to be replaced. I did not find this out until after he had repossessed the unit. I have not cashed the check from the insurance company. I am in a bind, don't know what to do. What would be the best option? I know he can bring action against me for the balance but would he have to consider depreciation on the unit?

Customer:

I am not asking for expert advice; I just need some options to consider.

LegalGems :

I understand. No, he would not have to consider depreciation on the unit; legally he is entitled to the outstanding balance. He is not entitled to the value of the unit - it is the amount of the loan obligation that is the issue - this is the amount he would receive if he brought legal action and prevailed. So if the unit is worth, say $100, but the loan balance is $300, he would likely receive a judgment for $300.

Customer:

So if I am able to start paying on the loan and decide to pay it off early, I could probably save a lot of interest? These were some high interest rates and I probably would save more by paying off early and being done with this account? How long does it usually take for legal action to take place in court?

LegalGems :

Since you have a settlement check, you may want to offer a lump sum settlement, as then they will generally take less than the outstanding amount. People generally start with an offer of 50-60% of the outstanding balance and then go from there. But yes, if you could pay it off early - the outstanding amount- and save interest, that would be a win situation. Legal action usually takes place rather promptly because the plaintiff wants to get his/her money. There are statute of limitations, which is the legal time frame where the case must be filed, or it is barred. For written contracts, it is 3 years.

Customer:

I only received repair money for the unit, minus my deduction. This is only $1000, just enough to repair the unit, which I plan to fix the unit with. I will make an appointment to try and make arrangement to pay the account and try to pay off early.

LegalGems :

That would save money over the long term.

LegalGems and 3 other Consumer Protection Law Specialists are ready to help you
Thank you for using JA Pearl. Hopefully you will be able to negotiate favorable terms with the seller.

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