If you’re being sued for a repossession deficiency, use our Minnesota Collection Lawsuit Guide to familiarize yourself with the process.

After your lender repossesses your car, they will sell it and apply the sale proceeds to your loan. In most cases, there will still be a deficiency remaining. More often than not, your lender will then sue you for that deficiency. If that happens, here are some possible defenses to the deficiency lawsuit:

• Total amount of credit provided was less than $7,500. Under Minnesota law, if the total amount of the loan was $7,500 or less, than the creditor cannot chase the borrower for a deficiency.

• Statute of limitations. In most Minnesota debt collection cases, such as credit cards, the statute of limitations is six years. However, the statute of limitations for a repossession deficiency claim is likely four years. If the creditor brings the deficiency lawsuit over four years after you made your last payment, the statute of limitations on the claim may have passed.

• Incomplete or ineffective assignment of the loan. Like credit card debts, many repossession deficiency accounts are sold to third-party debt buyers. The debt buyer must be able to provide a complete and detailed chain of title of ownership of your account.

• The sale of your car after repossession was not commercially reasonable. The general rule is that every aspect of the sale of a car after repossession must be commercially reasonable. This essentially means that the creditor must act in good faith and use its best efforts to get a fair price for your car.

• The lender failed to send you the required pre- and post-sale notices. The pre-sale letter must tell you when, where, and how the vehicle will be sold. It must also tell you how much money you have to pay to get the vehicle back. The post-sale letter must tell you how much the vehicle was sold for and explain whether you still owe money on the loan. Failure to send these letters may prevent the lender from collecting a deficiency.

It's also possible that the creditor may not have followed the proper procedures when they repossessed your car. This may allow you to bring a counterclaim against them in the deficiency lawsuit. While a counterclaim is not technically a defense to a deficiency lawsuit, a valid counterclaim can often lead to a reasonable settlement of the deficiency claims or even offset the deficiency claim altogether.

Ready to talk to a lawyer about a Minnesota deficiency lawsuit?
Schedule a consult with attorney Todd Murray.

Since 2009, Todd has been helping Minnesotans combat wrongful repossessions and defend repo deficiency lawsuits. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.