- Dedicated to helping people file bankruptcy for over 28 years

I have been practicing consumer bankruptcy in the Metro Detroit area for over 30 years.  One of the most common reasons that I see for people having to file bankruptcy is when their wages are being garnished for a balance owed to Credit Acceptance Corporation for a vehicle that was repossessed or voluntarily turned in by one of my clients.  It was thereafter sold at a private dealer auction and now there is a large balance due.


Due to our lack of good public transportation, many people in metro Detroit may turn to high-interest car loans as a last resort, which can often become a trap for the poor.

It’s hard enough to pay for a car that you have let alone one that you don’t have any more.


Credit Acceptance will hire a law firm to file a lawsuit against the person who entered into the contract and sue them for the difference between what was owed on the contract and what the car was sold for at the auction, after deducting repossession fees and costs, auctioneer fees and costs, storage fees, cleaning fees, additional accrued interest, etc.  The amount they sue for is typically well over $10,000.


Detroit is called the Motor City for a reason.  It is the automobile manufacturing company of the United States.  Unfortunately, it lags behind other major cities when it comes to public transportation and metro Detroiters need reliable transportation to get to work, buy groceries, go to the doctor, etc.  Many of my clients cannot afford to purchase or lease a new vehicle and they might have a less than perfect credit score and a forced to use subprime lenders to finance a vehicle purchase.  This is where Credit Acceptance Corporation comes in.


Credit Acceptance does serve a purpose in that it will generally finance consumers auto purchases when other banks or financial institutions will not.  But at a price.  That price is very high interest rates.  Generally, the rates that I see will nearly always be just shy of 25%, usually 24.99% annual percentage rate interest.  This means that most of the monthly payment is going toward interest, especially in the early months of the loan which is typically amortized over 60 to as high as 84 months.


My clients tell me the cycle goes something like this.  They find a decent job; one they need to help support themselves and their family.  They need transportation to get to and from that job, but reliable public transportation is lacking in metro Detroit, so they need a car.  They can’t afford a new car, so they look for a good used car.  Good used cars are expensive as well so they need to finance their purchase so that they can keep that job.  Their credit score is low, because they have been out of work and traditional lenders like Ford Credit, the large banks and credit unions refuse to finance their purchase due to that poor credit history.  They resort to the subprime lenders such as Credit Acceptance, Santander, etc., because they are willing to give them a chance.  The car breaks down, is totaled in an accident or is stolen in the first year of a 5- or 7-year loan.  Insurance lapsed because the rates were so high, they simply could not afford the premiums.  They are sued for the balance.  The creditor wins by default and their wages are garnished or their bank accounts or future income tax refunds are levied against by the creditor.


I see it every day.


Fortunately, filing Bankruptcy can help.  The filing of a Chapter 7 or Chapter 13 Bankruptcy petition will immediately stop the State court action against you at any point in time from being served with a summons and complaint and even after the creditor has been granted a judgment.  Even if the creditor has started garnishing wages or is attempting to levy against your income tax refunds or bank accounts, the automatic stay in bankruptcy goes into effect immediately upon the filing of the case and such actions are prohibited by federal law.


Have you been sued by Credit Acceptance Corporation? The Bottom Line.


If you are being sued by Credit Acceptance Corporation or any other creditor for collections, even if they have obtained a judgment against you, feel free to contact me to see if a bankruptcy filing can help you.  I have filed over 20,000 personal bankruptcy cases for residents of metropolitan Detroit over the last 30 years and I offer free consultations.


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