Voluntarily surrendering your car to repossession isn’t the cure-all to your financial problems that it’s sometimes rumored to be. It won’t make the damage to your credit any less. At best, it will save you a few dollars in towing fees and repossession costs, ordinarily tacked onto the balance you owe for your car. The state of Georgia won’t protect you much if the lender wants to garnish your wages to recover the money. Many of Georgia’s consumer laws are lender-friendly.
After you turn your car over to the lender, the lender will sell it, usually at auction. This will probably not bring top dollar for your vehicle. If it sells for less than your loan balance, you’re still responsible for the difference, even if you voluntarily gave up the car. For example, if you owed the lender $6,000 for the car at the time you surrendered it and it sells for $3,000 at auction, you still owe a $3,000 deficiency, as long as your loan contract includes language permitting this. Under Georgia law, the lender must notify you within 10 days of receiving the car back from you that it’s going to exercise its right to pursue you for the amount of the deficiency.
The Legal Process
Before the lender can garnish your wages for the deficiency, it must get a judgment against you by suing you for the deficiency balance. Georgia law allows your lender six years to do this. Even if you don’t hear anything more from the lender after receiving the first 10-day notice, this doesn’t necessarily mean you’re safe. If the lender wins the case against you and gets a judgment, it has another seven years to use it to garnish your wages. It can wait until you're more financially solvent so it can recover as much of its money as possible. At any time during those seven years, it can petition the court for a writ of garnishment and serve the writ on your employer.
If the lender gets a writ of garnishment against you, you can expect to lose your wages in excess of $217.50 per week, or 25 percent of your take-home pay, whichever is less. This is federal law and Georgia abides by it. If your take-home pay is $600 a week, your lender can garnish $150 of that, or 25 percent. Subtracting $217.50 from your $600 paycheck would result in a garnishment of $382.50. Since this is more that $150, your lender is limited to the $150 amount. The figure of $217.50 can change, however. It represents the federal minimum wage times 30. As of the time of publication, federal minimum wage was $7.25 per hour. The wage garnishment stays in place until your deficiency balance is satisfied.
Once a wage garnishment is in place, it’s difficult to do anything about it. You do have options, however. You can file for bankruptcy protection, which stops the garnishment as soon as you file your petition. You can also call the Georgia Department of Revenue and request a form for a hardship claim. File the claim with the same court that awarded the garnishment. You’ll have the burden of proof to convince the judge that the garnishment is an undue burden on you or your family.