Last Updated on July 13, 2021 by Joe Regan
Can a tow company send you to collections? If you don’t engage with a towing company actively, they can send you to the collections, depending on your state. In some states, the tow yard only auctions the towed car after the deadline.
In states where the tow can send you to collections when you decide to ignore the tow, they hope you continue doing it. The longer you abandon the car with them, the more money it piles up for them to meet the debt collectors.
Can a Tow Company Send You to Collections?
A tow company can send you to collections and the debt may be higher or lower depending on how long they impounded the car following the state laws. If you received a notification about your debt, you can call the tow company to request an itemized bill. An itemized bill will show what the company is charging for.
If the tow company does not send an itemized bill or the bill looks odd, you may contact an attorney and file a consumer complaint on the charges.
Moreover, a tow company can sell your car. So, if they sold your vehicle, they may have been trying to contact you to retrieve your car from their facility.
It is also likely that the tow company tried to contact you with the phone number associated with your vehicle registration. They would have sent you a letter or letters using registered mail. Also, by sending to collections, they obtained your car title from the motor vehicle agency. Since they have a title, it means they can demonstrate that you ignored their attempts to contact you.
What Can You Do if a Tow Company Sends You to the Collections?
You have three options to select from, which would depend on your state.
Ignore the Tow Yard
You can ignore a tow yard. However, refer to your state laws to know whether you’d be on the losing or gaining side. The tow yard typically files for a mechanic lien against you, which appears in your credit report.
To remove a lien can be difficult, and you might spend more than you would have paid by negotiating the two charges to a lower amount.
Pay the Amount
You can negotiate the tow charges through an attorney to a lower fee, or you threaten litigation. The company may disregard your litigation threat, especially if they’ve not violated it. Before going the legal route, consider if the legal fees add up more than the amount you’d pay for the claim.
You can declare bankruptcy to default on the tow charge obligation, but it’s an extreme way to get out of paying tow charge. It might cost more than it would solve. You may want to know more about declaring bankruptcy.
A Tow Company May Not Send You to Collections in Some States
In some states, tow operators will not automatically send you to the collections for not paying to retrieve your car. In Louisiana, A tow yard may apply for a Permit to Sell your car after a long storage period, typically between 30 and 60 days. The tow operator can dispose of or sell the car, which compensates for the unclaimed car. Also, they may not pursue the balance of the charges.
You may just walk away if your car is impounded. However, depending on your state laws, the tow operator may obtain a mechanic lien to sell the vehicle. Your car is sent to the auctions or scrap yard. If the impound lot can’t recover the cost of storing your car, they invite the collections.
The bigger problem is leaving your car with the storage lot if you owe money on it. Do not walk away if you owe on the car because you’d still owe without collateral – the car. It’s a legal issue that may be challenging to resolve, which costs money and affects your credit.
Being Sent to the Collections May Be a Tow Company Scam
Sending you to the collections may not be legal in some states, but the tow operator will try it. Since they own the car, especially after putting a lien on it, they get away with charging you to retrieve the car. However, they may have no vehicle to return but continued adding to the charges daily.
The best practice is to review how long an Impound lot can keep an impounded. Multiply the daily storage charge by the total number of days your car stayed with the tow. If the figure mismatches, it’s a scam. Also, if the collection does not appear on your credit report, the tow yard may be playing a fast one on you. Make sure to also request an itemized bill indicating the respective charges.
Suppose the calculated and assessed validly. The tow operator can sue you and take money from your account if they win.
Make sure to request a validation of the debt, i.e., proof that the collection is on you and that the collector is authorized to get it. If you find that the debt is yours, try to settle with the collector to prevent a lawsuit.
Regardless of the circumstance, it’s better to engage the tow operator for payment options. However, if you sold your car, but receive notifications on the bill, you can prove that you sold your car with your copies of the bill of sale, title, and photo ID. It’s also assumed that you filed the Release of Lien after selling the car.