Wells Fargo Dealer Services Volunteered to give back vehicle, still want exhorbanet fees and they sold the vehicle way less that it was worth. Sanat Ana, California

To try and get out of their legal obligations.

I got the info off of the Kelly Bluebook site and printed out copies and attached them to a letter I sent to Wells Fargo Dealer Services challenging their claim against us
- Here is the real deal.  When you have a car repossessed, and yes even though you turned it over to them voluntarily it is still a repossession.  By law they must sell the car at Auction.  On average you are lucky to get 25-33% of the "blue book" value at an auction, a car in pristine condition may get 50%.  So you should be very thankful you actually got over 50%.   

Once it is sold you are still on the hook for the deficiency balance, that is the balance that remains from you loan after they deduct what it was sold for and any fees associated with the repossession.  So yes, you do in fact owe $5,688.  However, if you fail to make that payment it will continue to accrue interest and only increase.  If you fail to make the payment they have the legal right to file a suit against you in court.  At which time if you get a judgement against you, they may be able to garnish your wages or attach any bank account you have.

Also I told them that the most I can pay is $20-$30 a month
-  Really?  Even if they froze the interest $30/month on $5,688 is over 15 years.  Sorry..but NO company would accept those terms, and no judge would require a company to accept them.   However, I have worse news for you.  By you sending them a letter that says you can pay $30/month.  Even if you "dispute" the balance that could be seen as an admission that you owe the balance..in other words you basically could have screwed yourself by making such a ridiculous attempt at a settlement offer.

I recieved another notice from them that they want the entire balance due now. If they return a payment of $30, can I consider it paid in full if they do not apply it to the "balance"?
- Perhaps in Fantasyland you could.  But in the real world NO...for the reasons already stated.  However, if they accept the $30..all that does is extend the Statute of Limitations which gives them more time to sue you in the future.

Also can I challenge them in court on the sale they made?
- Sure you can..but again as per the reasons already given you would basically be laughed out of court.  Well that is after a 30-60 minute lecture from the judge.