Auto loan in collections-what to do?

[flutj]

My husband had an auto loan before we got married that he defaulted on and the vehicle was repoed. He tried many times to get the vehicle refinanced for a lower payment so he could contine making payments but had no luck. On his credit report it shows the account has been sold 3 different times. We started paying $110 a month on the balance in July 2012and have since to the collection agency who has his account. They threatened to sue him and garnish his wages so we took the monthly payment to avoid that. This collection should fall off end of 2015/early 2016 since date of first delinquency is 12/2008. My question is should we keep making payments or just stop and let it fall off? Can they still sue him or garnish wages if we stop paying? What about when it falls off the credit report and we stop paying, can they still take action? Sorry so long, I'm new to all this and trying to clean up our credit to get a mortgage in a year or two. Current balance on it is $7200 and we just can't afford that all at once to pay. Any advice is appreciated, Thanks!

[pizzadude]

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@flutj wrote:

My husband had an auto loan before we got married that he defaulted on and the vehicle was repoed. He tried many times to get the vehicle refinanced for a lower payment so he could contine making payments but had no luck. On his credit report it shows the account has been sold 3 different times. We started paying $110 a month on the balance in July 2012and have since to the collection agency who has his account. They threatened to sue him and garnish his wages so we took the monthly payment to avoid that. This collection should fall off end of 2015/early 2016 since date of first delinquency is 12/2008. My question is should we keep making payments or just stop and let it fall off? Can they still sue him or garnish wages if we stop paying? What about when it falls off the credit report and we stop paying, can they still take action? Sorry so long, I'm new to all this and trying to clean up our credit to get a mortgage in a year or two. Current balance on it is $7200 and we just can't afford that all at once to pay. Any advice is appreciated, Thanks!

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In theory you can be sued anytime;  however your state's statute of limitations sets the time period that creditors have to file a claim against you.   If you are sued outside this window then your defense would be the SOL. 

Do a google search for your state's SOL for written contracts ~ that is likely what will be applicable.    However the fact that you've been making payments may complicate things ~ possibly resetting the SOL.  Again, this will vary by state.

[flutj]

Thanks. Would this be considered a written contract or an open-end account since it was an auto loan? Or do I go by the agreement that we have now to make the $110 payments? We never signed anything with the collection agency, just agreed over the phone. All have different sol.

[BatHunters]

Auto Loans are typically considered written contracts, even if it is transferred to a collection agency. The fact that you started paying again means you likely reset the clock on your states SOL. If you stopped paying they could probably sue.

[flutj]

That is what I was afraid of. Can I contact them to lower the balance or get a lower monthly payment? Or will that do more harm? I've spoken with them before reguarding payments (changing debit card #, etc) and they all were very nice (small company).

[pizzadude]

I don't think it would do any harm to inquire about reducing payments / interest;  however I don't know if they really have any incentive to work with you.   Good luck, and let us know how it works out!