Sued by a car finance company after repossession over the shortfall

This page is for people who fell behind on hire-purchase payments on a car, had the car repossessed or handed it back, and have since received a demand letter for the difference or a court summons claiming the shortfall.

The short answer: yes, a finance company can still sue after repossession, but the amount it claims often needs checking. Contracts signed before and after early 2023 may fall under different contract-control announcements that calculate the amount differently, and courts in these cases usually set mediation on the first hearing date. The first step is to read the hearing date on the summons, then gather the contract and the notice of the car's sale.

Where are you now?

You are behind on payments but the car has not been taken

Ask the finance company for a written statement of the overdue amount and keep proof of every payment you made. Check whether you have received a termination letter, because termination is what starts the process of taking the car back and calculating any shortfall.

The car was repossessed or returned, and no sale notice has arrived

Ask for a copy of the record of the car being taken back, find photos of the car's condition on the return day, and note the mileage if you remember it. Then follow up on whether the finance company has sent notice of the sale and the sale price, since the sale price is the starting point of the shortfall.

You received a letter demanding the shortfall

You do not need to accept the figure straight away. Ask in writing for the breakdown: principal, interest, collection charges and sale price. A written acknowledgment of the debt, or a part payment, can affect how limitation periods are counted, so show the letter to a lawyer first.

You received a court summons

Write down the hearing date exactly. Photograph the summons and every page of the complaint, then take them to a lawyer to see what is being claimed and which contract terms the amount was calculated from.

What not to do

Do not skip the hearing. These cases are usually consumer cases. If the defendant neither attends on the hearing date nor has filed an answer, the law treats this as a default on the answer, and the court may go on without hearing your side.
Do not agree to the figure in a chat or on the phone before checking that it was calculated under the announcement that applies to your contract.
Do not hide the car or transfer it to someone else while it is still under the contract. Disposing of a car that still belongs to the finance company can amount to a criminal offence such as misappropriation. Talk to a lawyer about your facts before doing anything with the car.

Legal steps

The hirer defaults. The finance company sends a notice and terminates the contract, under the contract and the contract-control announcement for car hire-purchase.
The finance company takes the car back, either by repossession or because the hirer returns it.
The finance company sells the car and calculates the "shortfall" from the amounts the announcement allows, less the sale price.
It demands payment and, if unpaid, files suit, which is typically handled as a consumer case.
The court summons the defendant to the hearing date. On that date the court first tries mediation. If there is no settlement and no answer has been given, the court takes the answer, which may be in writing or spoken, and then hears the evidence. A defendant may also file a written answer before the hearing date.
The court gives judgment, or the parties sign a compromise agreement. If a judgment is not paid, the creditor can apply for enforcement.

There is no fixed duration that applies to every case, so no number is given here.

Documents a lawyer needs to see before assessing your case

The hire-purchase contract and payment schedule, with the contract date visible
Receipts or statements for every payment
The termination letter and its envelope, to show the date received
The record of repossession or return, and photos of the car's condition
The notice of sale, the result of the sale and the sale price
The letter demanding the shortfall
The summons and a copy of the complaint
The guarantee contract, if someone guaranteed the debt (a guarantor being sued is covered on a separate page)

Relevant laws

Civil and Commercial Code, section 572 onwards and section 574: hire-purchase contracts, default and termination.
Announcements of the Contract Committee designating car and motorcycle hire-purchase as a contract-controlled business, versions of B.E. 2561 (2018) and B.E. 2565 (2022): what may and may not be charged after termination.
Consumer Case Procedure Act B.E. 2551 (2008), sections 24 to 27: hearing date, mediation, the answer and the effect of not attending.
Civil and Commercial Code, section 193/29: a court cannot raise prescription on its own; the defendant must raise it in the answer.
Civil and Commercial Code, section 193/14: acknowledging a debt interrupts the limitation period.

Frequently asked questions

The car was taken, so why do I still owe money?
If the finance company sold the car for less than the amount that the contract and the contract-control announcement allow it to claim, it may claim the shortfall. That amount must be calculated by the announcement's rules, so the calculation should always be checked.

Which announcement applies to my contract?
As a general rule, contracts made before the 2022 announcement took effect (around early January 2023) fall under the 2018 version, and later contracts under the 2022 version. The exact start date and the current status of the announcements should be checked by a lawyer against the Royal Gazette. Do not decide from the contract date alone.

How do the two versions calculate the shortfall differently?
According to an academic comparison, the 2018 version counts instalments not yet due in full. The 2022 version counts overdue instalments plus only the principal of instalments not yet due, and does not allow interest on instalments not yet due after termination. A lawyer will compare this against your actual contract.

Do I have to file my answer within 15 days?
In a consumer case the court summons the defendant to a hearing date for mediation, the answer and witnesses on the same day, so the 15-day rule of ordinary civil cases does not apply. The defendant may answer orally on the hearing date or file a written answer before it. Read the summons carefully for what the court has ordered. If the summons states a deadline for the answer, follow the summons.

What is the limitation period for the shortfall?
Most sources say there is no specific rule for the shortfall, so the general ten-year period under section 193/30 applies, which a lawyer must confirm against case law. Unpaid hire-purchase rent may fall under the two-year period in section 193/34 (6). Deciding which part of the claim falls where is for a lawyer to check against the contract and the complaint. If a claim is time-barred, the defendant must raise it in the answer.

Will mediation reduce the amount?
The court arranges mediation on the first hearing date. The result depends on what both sides agree, and nobody can promise an outcome in advance. If you agree, the terms are recorded as a compromise agreement.

How is a lawyer's fee set?
It depends on the scope of work, for example advice only, drafting the answer, or conducting the whole case, and on how complex the documents are. The office confirms the scope and the fee in writing before any work begins.

Summary

Repossession does not always end the matter, and being sued does not mean every baht claimed is correct. What decides it is the contract, the announcement that applies to that contract, the sale price of the car and how the finance company calculated the shortfall. If you have the documents listed above, especially the summons and the notice of sale, bringing them to a lawyer will show which stage your case has reached and what points can be raised.

Sued by a Car Finance Company After Repossession: What to Do