• Florida law allows creditors to obtain deficiency judgments.florida adventure image by feisty from Fotolia.com
  
  In Florida, like most states, a creditor can repossess an automobile without obtaining a court order if the consumer stops making car payments. Creditors can only do so as long as they do not use violence or the threat of violence when towing the vehicle away. However, if a creditor repossesses, the consumer's obligations are not finished. If the creditor resells the vehicle and does not recover their losses, the creditor can still go after the consumer for a deficiency judgment.
  
  

Repossession

• When a consumer defaults on an auto loan, a creditor, in Florida, can send a tow truck driver to retake possession of the vehicle. Typically, the consumer is also liable for the costs the creditor incurs in repossessing the vehicle. These costs include the tow truck fees, any storage fees and reasonable attorneys' fees. If the consumer voluntarily returns the vehicle, that may reduce the consumer's potential liability. However, the creditor cannot legally keep or sell any personal item left in the automobile.
  
  

Auction

• Once the creditor takes possession of the vehicle, the creditor may sell the vehicle at an auction. The creditor can also keep the car to compensate it for the debt. However, either way, the creditor must provide the consumer with notice of what it intends to do with the vehicle. If the creditor decides to resell the vehicle, Florida auto deficiency laws require that all aspects of the sale be done in a "commercially reasonable manner." Typically, that means the creditor must resell the vehicle for market value (or close to market value). For example, if the creditor resold a Mercedes with a $40,000 value for $10,000 the law would likely not consider that "commercially reasonable." If the creditor sells the vehicle in a commercially reasonable manner and does not fully recover the outstanding debt plus costs and interest, the consumer may be liable for a deficiency judgment.
  
  

Example

• A deficiency judgment occurs where there is a difference between what the consumer owes on the vehicle and what the creditor gets at the auction. Suppose a consumer defaults on a $10,000 car loan after paying off $1,000 in principal. In addition, the creditor repossesses involuntarily and incurs $1,000 in towing, storage and attorney's fees. The creditor then sells the car at auction in a commercially reasonable manner and gets $8,000 for the car. The creditor could then sue the consumer for $2,000 (or $10,000 minus $1,000 paid off minus $8,000 in resale value plus $1,000 in reasonable costs). To get the deficiency judgment, the creditor would have to file a lawsuit and win a judgment against the consumer.
  
  

Warning

• Please contact a qualified attorney licensed to practice in Florida to find out what obligations, if any, you may with regard to Florida auto deficiency laws, which are subject to change.