Ally Financial Inc. has been hit with a class action lawsuit for allegedly improperly claiming debt forgiveness on consumers’ repossessed vehicles in violation of state and federal law. The class action lawsuit was removed to federal court last week.
Plaintiffs Joseph and Danielle Riley filed the class action lawsuit alleging that Ally, formerly known as GMAC Inc., failed to comply with the federal Automobile Sales Finance Act when notifying consumers that it was repossessing their cars. The Rileys argue that Ally issued deficient repossession notices and therefore never had a valid claim to collect the sale deficiency debt from the putative Class Members. Subsequently, Ally purported to forgive the debts and filed 1099-C debt cancellation notices with the Internal Revenue Service, which provided the bank with significant benefits but burdened consumers with tax liability.
“Due to the wrongful 1099-C claims, Class Members have paid substantial additional taxes to the IRS, face onerous IRS collections activities, require tax liability consultation and defense expenses, among other economic harm, all for the alleged benefit of Ally Financial’s unfair, false, fraudulent, unlawful and deceptive claims of debt forgiveness,” the class action lawsuit says. The Rileys argue that Ally’s conduct offends public policy and harms consumers. Further, they argue that Ally knew or should have known that the post-repossession notices were defective and that Ally “continues to hold ill-gotten gains from, inter alia, unearned tax benefits from the alleged debt cancellation and debt forgiveness, together with profits and interest derived from that money.”
By filing the class action lawsuit, the Rileys seek to represent a class of “California consumers whose vehicle was repossessed pursuant to a California Retail Installment Sales Contracts, who were entitled to reinstate their contract, for whom Ally Financial issued an IRS Form 10990C for post-repossession sale deficiency amounts, and where the 1099-C was issued within four years prior to the filing of this Complaint.”
The Rileys argue that under California’s Unfair Competition Law, Ally must issue corrective forms, publicly admit that its notices were improper and participate in a corrective campaign. They also seek an order requiring Ally to indemnify the Class Members for any and all losses regarding IRS tax assessments and defense costs stemming from the issuance of the 1099-C.
The plaintiffs are represented by John W. Hanson and Michael E. Lindsey.
The Ally Financial Vehicle Repo Debt Forgiveness Class Action Lawsuit is Riley, et al. v. Ally Financial Inc., Case No. 3:14-cv-010305, in the U.S. District Court for the Southern District of California.
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49 thoughts onAlly Financial Hit with Vehicle Repo Debt Forgiveness Class Action
I have received a 1099-c dated 2023 from a repo by gmac financial that was in 2008– i had no awareness and this debt is so long ago–why and how is this ok–is there more people this has happened to? cant be ok for this to be happening
Ally is back at it again I received a debt forgiveness from a car that was reprocessed in 2019. The debt was forgiven due to a lawsuit against them where they lost the suit. Than this year in 2025 I’m issued a 1099-c of debt cancellation requiring me to pay taxes as it was earned income. The amount actually is more than the vehicle was worth at the time of repo ??. I believe they have lost a suit in 2014 for similar actions against customers ? I hope we can get another suit rolling against them as I’ve read online of a lot of people having the 1099-c forms sent to them this year.
I am with you all.I got a letter to my dad’s house in my name so he sent me it .I call them and they start saying it was about a Minivan .My mother passed away about 5 years ago from cancer .She had a minivan of the make and model plus the address where the letter was received was her address .I told them it wasn’t mine and the lady started to scream at me that i must have co-signed the loan .I don’t have great credit my mother’s was good .My dad said the van was paid for and they traded it in .My parents always paid their bills .I haven’t owned a car in over 15 years and this has to been from over 17 years ago .They were so rude .Now I am stuck paying a tax bill on a car that wasn’t mine .From my dad says it’s already paid for and traded in .
It happened to me .Sent me one when I called about it they said it was from a repo from 2007 .They are digging up people’s information online for pennies on the dollar and writing these off for tax for purposes.I don’t know how this is allowed especially since this happened at least 18 years ago .I have never heard of this Ally Bank before.If they sold a car from 18 years ago today no way they would get the 8,234.15 they are writing off on it .I would think it would the value of the item when you received the letter I don’t remember having a repo but this was 18 years ago .Add me to the lawsuit if someone files it .
They returned my payment and then repossessed my car with no knowledge they stranded me my wife and 2 children in florida when we were visting family On vacation.
My son nor I received any sort of documentation or phone call about Ally was going to repossess his car. We called ally several times and they kept placing blame somewhere else. They have both of our numbers so there is no excuse. We called them several times bc the l repo in Jan was done to a malicious act to destroy my son. We called law enforcement and they were telling us what we needed to do. They even called Ally on our behalf. Now my sons car was sold at auction, after Ally telling us there would be a freeze on the vehicle until everything was settled. Can anyone help?
Called Ally phone number to make a payment for my daughter. I called the number on the payment document and kept getting a medical facility. I looked up Ally online because the bill was due that day and needed to get that payment in on time. Long story story short got through to Ally but transferred to a 3rd party payment center gave the woman the account number, a few seconds later she said “I need to….” Without finishing sentence put me on hold and didn’t take the payment. Are these loans forgiven under NESARA?
Is thus lawsuit open? If not, do you have another one against this company?