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1099C on car that was returned under lemon law.


schirallicpa

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These issues never end this year.  I can't pick up a single gravy return.  Every single one has something in it that I gotta mess with. 

This guy claims the 1099C debt was for a used car that he had purchased 5 years ago and returned to the dealer claiming lemon-law.  Says that everything was settled.  I asked him if Wells Fargo had tried to contact him, or send him any notices on this debt that was supposedly taken care of.  He claims not.

And of course - can't come up with any of that old paperwork.

 

SMH...........crying..............searching for new career......................

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>>>>>>This guy claims the 1099C debt was for a used car that he had purchased 5 years ago and returned to the dealer claiming lemon-law.<<<<<<

I'm wondering if all of the debt was forgiven or a portion there of. I would tell this guy he is on extension until he produces the paperwork to substantiate the terms of the lemon law details and give him a bloated price or send him packing. Here is some useful reading. If it were me, I might send this guy packing. These two excerpts may answer some questions. The link to this info is Used Car Lemon Law Questions and Answers | New York State Attorney General (ny.gov)  While this is from New York, I would feel reasonably certain the law is similar in most states.

WHAT IS THE PURPOSE OF THE USED CAR LEMON LAW?

The Used Car Lemon Law provides a legal remedy for buyers or lessees of used cars that turn out to be lemons. The law requires dealers to give you a written warranty. Under this warranty, a dealer must repair, free of charge, any defects in covered parts or, at the dealer's option, reimburse you for the reasonable costs of such repairs. If the dealer is unable to repair the car after a reasonable number of attempts, you are entitled to a full refund of the purchase price. No used car covered by this law can be sold by a dealer "as is." (A copy of the law may be found at the back of this book)

IF THE CAR IS FINANCED, HOW IS THE REFUND DIVIDED?

The refund by the dealer is the same whether the car was financed or not. However, when the car is financed, instead of the entire refund going to you, the refund is usually divided between you and the lender (the bank or finance company). Generally, the lender will calculate how much is still owed by you and apply the refund to that amount. The balance of the refund will then go to you.

If, however, the amount you owe the lender is more than the refund from the dealer, the dealer must notify you in writing, by registered or certified mail, that you have 30 days to pay the additional amount owed to the lender. The notice must also contain a conspicuous warning that the failure to pay the additional amount to the lender within 30 days will terminate the dealer's obligation to provide a refund.

 

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Back in the day, when I was in high school, the local banks still reaped their own cars.  I dated a son of a banker.  Every weekend Tom would have a different car that his dad had brought home.  And we'd drive it around all weekend.  It was awesome.  This was in the 80's when no one ever had new cars.  Half the fun of dating him was riding in the new car each week.  

 

But - in the mean time I'm wondering when the car is re-po'd, shouldn't that have relieved the debt?  The car was only owned by him for a few weeks and would have still been worth near the amount financed.  Part of the risk of financing is taking a loss on the car you take back.  I'm still struggling with this. 

 

eh - extension.....

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Chapter 2:

Car was reaped in 2012.  At the time TP owed $20000.

Debt was considered in default in 2015 in the amount of 13101.

The car was sold at auction for 8000.  It was always my understanding that regardless of the price they got, it relieved the debt.  I may be way out of the park on that.  But when the bank took the risk of lending, it agrees to take the car back and get what it can to settle the debt.  That is the collateral.  If they lended more than it was worth then they take the loss.

Anyway, we would think the 1099 would be the 12000 or maybe the 13101.  The 1099 is for 10000.

 

 

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Doesn't it depend upon sate law?  I thought that was why it's important to know if you're in a "recourse" or "non-recourse" state with issues like this. Also, it's possible the borrower may have been "upside down" at the time the car was purchased due to an unpaid balance from a prior auto loan being rolled into the new loan (or more appropriately, piled onto the new loan).  Next to divorce, auto financing is the biggest drain on personal net worth in this country, IMO. 

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