How Does Car Repossession Work
How quickly a lender can repossess your car boils down to what type of lease or finance agreement you have. With both a personal contract hire and a personal contract purchase deal, the lender can repossess the car at any time.
However, with a personal contract purchase, the company will need to get a court order if youve already paid at least a third of the amount.
The lender will have to give you at least 14 days notice if its planning to repossess your car, and it will give you the chance to remedy the default.
So if youve fallen behind on your payments and you suddenly have an influx of cash, you could try and settle the debt. Should the lender go forward with the repossession, the lender will try sell the car off for market value.
If the car sells for less than what you owe, you may be required to pay the difference or face being pursued in court.
What are repossession agents legally allowed to do to get the car?
Repo agents are legally allowed to take back the car, but there are restrictions on how far they can go. They cant clamp or tow your vehicle if its inside a locked garage for instance.
However, they can put a clamp on your car or tow it away if its parked in your driveway or in a public place like a road or car park or even if its left in an unlocked garage.
How Do I Get Personal Property From My Vehicle After Its Repossessed
A creditor cant keep property that has been left in a vehicle, and must use reasonable care to prevent others from removing your property. Ask for your property to be returned. If your property is not returned, you can file a lawsuit in small claims court the fair market value of the property at the time of the loss.
Selling Your Repossessed Items
If you can’t pay or find a buyer within 15 days, the lender can sell the items.
They can only recover money already loaned to you, but not any accrued fees, charges or interest. If they sell the items for more than what you owed, you should be refunded the extra. Sales must be commercially reasonable and done by auction, public tender or private sale. If the lender doesnt hold a sale within 30 days, you can require a sale by auction.
You May Like: Florida Paper Title
What Is Auto Repossession
Auto repossession is when a lender takes back a vehicle due to missed payments. Often, auto repossession happens without warning. When you purchase or lease a car, youre expected to make the committed payments until the vehicle is paid in full. If you stop making these payments, the lender has the right to take back their vehicle, sell it, subtract the selling price from your remaining loan and come after you for the outstanding balance.
Auto repossession is not an ideal situation for many reasons:
- Auto repossession shows up on your credit report, so it can significantly lower your score and likely stay on your report for up to seven years. This negative mark can also make it challenging to find a lender who will sell you another car.
- You may have to pay a repossession fee.
- Your car may be sold at a discount compared to what its worth, which leaves more of the loan for you to pay off.
- You often deal with weeks of stress and worry because auto repossession happens without warning. So, every time you walk to your car, youll be concerned that it might not be there.
What Rights Do I Have
Under the law, creditors cannot breach the peace when they repossess a car. So they have no right to use violence or break and enter your property to seize your vehicle. They cannot use or threaten physical force. And they cannot remove your car from your residence without obtaining your permission.
State law also limits what creditors can seize with a deficiency judgment from the courts. Creditors may seize any money you have in bank accounts. However, they cannot garnish your wages to enforce a judgment for a car loan. They also cannot seize funds from your retirement or pension accounts. Social Security, college savings plans, IRAs, and awards from personal injury or wrongful death lawsuits are all protected as well.
Don’t Miss: How To Transfer Car Title In Arizona
Dealing With Car Loan Debt And Vehicle Repossession
Home » Blog » Dealing with Car Loan Debt and Vehicle Repossession
Reading time: 4 minutes
2020-04-23
If you are behind on your car payments, the finance company may repossess your vehicle as a way to recover the money they are owed. Having the vehicle towed, however, is just the start of your financial problems. In most cases, the vehicle will be worth less than the loan balance, which means you will likely have a residual debt after repossession. Below Ill explain when a lender can repossess a vehicle and what the implications are for you going forward.
What Can Be Repossessed
A lender can only repossess items after you entered a credit contract when:
- you have specifically agreed to add those products as security
- you have sold the original secured items and bought other things with the money
- you bought products that have been installed in or fixed to products which are listed as security. The lender must cause the least amount of damage or inconvenience to you when they remove these
- items are subject to a purchase money security interest , which means that money was borrowed to buy those particular items and the creditor has registered their financing statement within 10 working days of your possession of the items.
Lenders cant repossess certain necessary consumer items like beds, bedding, cooking equipment , medical equipment, heaters, washing machines and fridges, unless they are individually identified, item by item, as being a security interest in your credit contract, or the items are subject to a PMSI.
If they try to repossess other items that arent specified in the contract, that is illegal and you should report them to the Commerce Commission.
Read Also: How To Remove Scuff Marks From Car Door Panels
Youll Have To Deal With It
As great as it would be to just ignore the looming threat of repossession, thats a very bad idea. You can close your eyes and hope it all goes away, but realistically, the only thing thatll be going away is whatever is being repossessed.
Debtors stay silent and dont call and just let the court date come without showing up, Lovely warned. Then it is out of our hands and the Sheriff picks up the collateral. If you are facing difficult financial times and miss payments resulting in a default in your contract, the best thing to do is simply be honest and try to negotiate before the file gets to a lawyer like myself.
Your Rights After Car Repossession
Once your vehicle is repossessed, you have the right to try and get it back. To do this, you have three options:
Lastly, if any of the three options dont work, and youre struggling with other bills, you may want to consider filing for bankruptcy. This should be a last resort option, and not taken lightly.
When you file for bankruptcy, it triggers an automatic stay that temporarily prevents a lender from selling the car or coming after you for payments. Keep in mind that a bankruptcy stays on your credit reports for up to seven or 10 years, and could make it harder to get financing in the future.
Recommended Reading: Does Carvana Buy Leases
Place And Time Of Repossession
A repossession agent in California cant come into a private building such as a garage, nor can they enter a secured or locked area such as a gated driveway, without the permission of the owner of the premises.
Your car can, however, be repossessed from unsecured driveways, streets, parking lots, and other publicly accessible areas in California at any time of day or night.
You dont need to be present when the vehicle is taken, so if you park on the street and go to sleep theres a chance the car may be gone when you wake up.
If you happen to be present when the cars being taken, you may be able to save the car by paying the balance due rather than losing your wheels. If that happens then you have the right to receive an itemized receipt, and the repossession agent is required to forward your payment to the car lenders.
What Rules Does My Lender Have To Follow
Once the period to catch up on your payments has passed, the lender can repossess your vehicle, but they have to follow these guidelines:
- The repossession agent cant use force or threats when repossessing the vehicle.
- The person sent to get the vehicle is not allowed to go onto your owned or rented property unless you allow it. But, if your car is parked on the street next to your property, the person doesnt need to have your consent.
- Repossession from other public or private locations is usually allowed as long as the repossession agent does not breach the peace or engage in disorderly behavior.
- The person sent to get your vehicle has to tell the police department in your city or town about the repossession within one hour of taking your car.
You May Like: How Much Do Car Salesmen Make In Commission
Understand How You Can Buy Your Car Back At Auction
If the lender is planning to sell your car, theyll likely sell it at a public auction. You, like any other member of the public, have the right to bid on your car and you might get a great deal. People go to auctions because organizations like police agencies and lenders want to get whatever they can for the cars theyre auctioning. In reality, however, if you couldnt keep up with monthly payments, you likely wont have the cash to buy it back in full.
Can I Hide My Car To Avoid Repossession
It is illegal to hide your car with the intent to defraud the bank.
Are You in Danger of Repossession?
Are you facing the loss of your car or other personal items due to falling behind on your payments? Not only is this an embarrassing situation, it is expensive to resolve and could be impossible to manage financially. Falling behind on payments for tools, your car, or other items you have purchased can result in a disastrous situation. Eventually, the company you owe money to will repossess the car or other item if you do not seek the kind of legal help that you deserve. Stop repossession in Georgia today by speaking with an attorney.
If you are facing the threat of repossession in Georgia, call Matthew Cherney, , for help. Did you know that all repossession actions will be stopped immediately when you file for bankruptcy? This gives you the time to get this pressing issue sorted out before it is too late.
Recommended Reading: How To Cancel Car Insurance Geico
What Happens With The Property After It Is Repossessed
If you do not redeem the property, it will likely be sold at an auction or a private sale. You have the right to advance notice of the time and place of any public sale. If it is a private sale, you are entitled to notice of the date after which private sale can be made. The proceeds of the sale first pay the cost of the repossession, storage of the property, preparation for sale, and the costs of the sale itself. Any remaining proceeds after the sale are used to pay the debt. If the proceeds from the sale dont cover the costs, the creditor can file a lawsuit against you to make up the deficiency. If there is any money left after the sale and debt, the creditor must pay it to you.
The Car Repossession Process: A Game Of Predator And Prey
Repo people wont lay a finger on you, but they do have the persistence of a tiger hunting a deer. If theyve been sent out to get your vehicle, theyll keep on looking for the right moment to snatch your car. A large part of the car repossession process in Canada involves close and careful watching. Only after do they take action.
Read Also: How Much To Remove Car Wrap
Paying Back What You Owe
The deficiency balance is the amount left over after the car has been sold. Once the car is sold off then the loan becomes unsecured. Since the car is gone, there is no longer collateral attached to the loan and therefore it has become unsecured. Hopefully your creditor will get the full amount of the loan at the sale, but if they dont they’ll be coming after you for it.
Since you will be liable for the remaining balance it would be in your best interest to make sure the creditor gets the best price. Even if you know someone that wants to buy the car then pass this information onto your creditor. It’s it your best interest to get the BEST price because it will be you paying the deficiency.
You can be sued for the deficiency balance and we all know how rotten it feels to pay for something you no longer have. If you can get involved in the sale process, do your best to do so. Many credit unions and smaller banks will try to get the best price but it’s nice to know you can help in any way by spreading word of the car’s sale date. Whatever it takes to get yourself involved in that process can only help you in the end. The less you are left owing on the car, the better, right?!
What Are The Repossession Laws In Illinois
Illinois repossession laws allow the lender to sell your repossessed vehicle at auction if you do not redeem it by their deadline. Illinois repossession laws allow the lender to collect the remaining difference from you if the auction price of the repossessed car or truck did not cover the full balance of the loan.
You May Like: How Much Commission Do Car Salesmen Get
Time Period To Reinstate
If you’re allowed to reinstate the loan by state law or by the terms of your loan agreement, then you might have even less time to act. To reinstate the loan, you pay off the overdue amounts, plus certain costs and fees, to bring the loan current.
State laws vary on the amount of time you have to reinstate the loan. Typically, you’re allowed only 15 days after the repossession to reinstate the loan. If your right of reinstatement is based on the loan agreement, then the time period might be more or less, depending on what the agreement says.
When The Repo Man Lurks Around The Corner
- Skip tracing Repo people are good detectives, using online databases to find people who are trying to evade the banks and lenders. Sometimes, theyll have to take the old-fashion approach of making phone calls and knocking on doors. There are even informants at times. These tactics may seem unethical, but they are legal and perfectly understandable. After all, no one gets a free pass when it comes to paying bills.
- People watching Now this is where things get interesting. When people fear theyre about to have their car repossessed, theyll hide it in a garage, or keep shifting its location so that the repo man gets confused. So the repo people have to keep track of such individuals. In the moment when theres an opportunity to seize the vehicle, the repossession has to happen.
- Remaining calm Remember the expression, dont shoot the messenger? Well, many people literally ignore that phrase when the repo guy comes along some actually shoot at them! If theyre not getting shot at, theyre facing verbal abuse, or physical assault. Repo men are merely messengers since theyre doing a task thats initiated by financial institutions. Despite all of this, they have to remain calm and non-confrontational.
Also Check: Are Car Lease Payments Tax Deductible
What To Do When Youre Worried About Car Repossession
If you think that youâre going to have trouble keeping up with upcoming car payments, you should contact your lender to discuss your options. Your lender might agree to create a new payment plan, defer payments, or refinance the loan so that you donât miss any payments and risk repossession. You can also consider selling your car to pay off the debt and avoid repossession costs.
Bankruptcy could also be an option if youâre worried about missing car payments. If you file for bankruptcy, youâll still owe whatever the car is worth, but this action will stop your car from being repossessed. Bankruptcy will also give you more freedom from other debts so you can focus on your car payments.
Whatever you decide to do, you shouldnât miss payments without first contacting the lender. You also shouldnât try to hide the car from the repo man because doing so will only increase the amount of debt you owe. Before your car is repossessed, upcoming loan payments add to the loan balance and interest continues to increase the total amount owed.
