Review paperwork you have received from the lender about the deficiency balance. Note the amount. If you don't have paperwork from the lender, call to find out how much you owe.
Offer to settle the debt for less than the full amount owed. Let's say you owed $7,000 on the car when it was repossessed, and various fees increased that amount to $8,000. The car was sold at auction for $5,400, leaving a deficiency balance of $2,600. Offer to settle the debt by offering 20 percent of the balance--$520 in this example. At this point your deficiency balance is an unsecured debt and subject to the same debt settlement terms generally offered on delinquent credit card accounts.
"The New York Times" reported in 2009--at the height of the recession and credit crisis--that banks were settling credit card accounts for as little as 20 percent of the balance. However, most settlements are usually for about half the balance. After offering 20 percent, be prepared to increase your offer until you have a deal. Settlement agreements can be structured in a number of ways, including monthly payments over several months.
Ask for payment arrangements covering the entire balance if a settlement isn't possible. Rather than sue you in small claims court, the lender may agree to the payment plan.