Litigating distressed auto accounts is similar to litigating other types of consumer credit but also has a few distinct considerations you should know about. There is a high average balance, return on cost calculations, timing considerations and documentation complexities that differ from other consumer products. Although many of the same fundamental consumer debt litigation strategies apply, auto loans are just a little different.
High Average Balance and Longer Liquidation Curve
The average balance of auto loan accounts can be two to three times the size of credit card balances, which generally leads to a longer liquidation curve. Simply put, the more money that’s owed, the longer it may take the consumer to pay it off. It’s important to understand that the litigation process is a long-term program and that a higher balance extends the payoff terms many years compared to lower balance accounts. Some lower-balance asset types experience lump sum payoffs at a higher rate during the suit process. Due to the higher balances, this is less so for auto accounts in general; however, payment plans can still be negotiated prior to judgment.
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