I have a two part question. My husband had an auto loan and there was an issue with a payment in June 2009. My husband asked that the bank i...

Question

I have a two part question. My husband had an auto loan and there was an issue with a payment in June 2009. My husband asked that the bank investigate the issue, but he didn't follow-up. Needless to say, the bank has treated his account as if he was a month behind every since.

My husband called the lender on 12/1 to obtain the balance on his account. A previous payment was made on 11/3. He was informed that the account had been paid in full and that he should receive his title by 12/10. On 12/17, when he did not receive the title, he again called the lender. He then was informed that he owed $2291.20 ($520.81 last payment and $1767.96 late fees). The lender later sent a letter dated 12/17 stating that the account balance of $2291.20 had been charged off.

1. Can the lender charge off the account even though the monthly payments were made?

He did have online access to the account on the lender's website. He access has since been removed. The account was last accessed on 11/12. At that time,the balance was indicated as $520.81. This payment was completed on 01-02-15. The lender has now stated that they will not release the title until $1767.96 in "late fees" are paid.

2. Is this legal?

Thank you for your time.

Answer

You've admitted in your post that your husband missed a payment or it was not credited. His not following up is costly. Yes he owes the payment unless he can prove it was received, and he also will owe late fees under his contract. If he stayed one payment behind, he foolishly chose to accrue 5 years of late fees. While we do not have his contract and you do, it sounds like they were doing a late fee in the $30 to $40 a month range. By ignoring this he has a charge off on his credit report, which is a huge ding that will increase his future borrowing costs, and he is not entitled to get the title until he pays. My suggestion (besides the fact that this needs to be a lesson to your husband not to procrastinate and to take things like this seriously) is for him to talk with a supervisor or manager at the bank, and see if they will negotiate a reduced amount and see if they might re-report his credit in a better status. He should also ask for written documentation that the amount sought is correct (if it is off, he only owes the correct number).

Answer

In addition to the very sound advice of Attorney Ashman, I would demand a full accounting of the period beginning one month before the alleged problem in June of 2009 to the present.

If the paperwork shows that there really was a bank error and that the late fees were improper, this should be removed totally. If the bank is correct, then your husband was ... not very intelligent about this. Didn't he ever get a statement and see that he was being charged late fees? The bank does not have to release the title until all the fees are paid IF they are proper. Lenders are not supposed to do this but the trade jargon is "pay for delete." If the whole fee is paid, see if the lender would be willing to remove the charge off and all late fees and report the account on your husband's credit as "pay as agreed" or something like this. If they will not, then how much of the fees can be paid in a lump sum up front? If you can pay at least 50% of the late fees, try negotiating with the bank.