You have two debts that have been secured by two different creditors on one piece of property; clearly, only one can actually take possession of it if you default. Having the collateral seized by one doesn't extinguish the debt to the other. I am guessing that one company found out the collateral was used in two loans and decided to take possession of the car due to your default (of the conditions of the loan), the other debt continues to exist and is not extinguished, you still owe it.
What happens now? My guess is both companies will take action against you to get whatever remaining debt you owe them.
I am licensed in New Mexico and Pennsylvania, and therefore any discussion of issues related to other states must considered within that context. In addition, my comments are not intended to create a legal representation but merely to respond to the limited facts presented by the question. Any opinion herein is not meant as a precise statement of legal rights or as a recommendation of any particular course of action. A more complete legal review can be obtained through local counsel.
Either Title lender could repossess if the debt was not being paid or if they discovered fraud in the inducement. As the other attorney explained, the repossession by one company did not extinguish your obligations to pay the full debt owed to both companies.
If the repossessing company sells the vehicle at auction for less than you owe, it is likely to sue you for a deficiency. The other company does not have anything to sell, so if you stop paying them, they can also sue you. Depending on how many debts you have, you may want to consider a bankruptcy. Most bankruptcy attorneys will give a free consultation. You should also call and make sure you will actually meet with an attorney before you sign a retainer. If you have to pay first, then it is not a free consultation.
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