Saturday, September 24, 2022

What To Do If Your Car Is Repossessed

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Establish Whether You Can Get The Car Back

What to do When Your Vehicle is Repossessed Should You really Pay?

Lenders dont typically repossess a car with the intention of auctioning it immediately.

Many a time, repossession is a strategy to get you to act. When you fall back on car loan payments, you might not feel the urgency to keep servicing it. You still have the car in your possession after all.

However, when the lender makes the move and takes the car, reality will hit you. You stand to lose your prized asset. If youre like most people, youll want to get it back.

This is why you shouldnt panic when the repo happens. Call your lender and establish how you can get it back.

In most cases, youll need to bring the loan up to date. This means if youve defaulted for three months, youll have to pay up the total for this period, including any fines or charges.

If youre able to do this, use this opportunity to renegotiate an alternative repayment plan that suits your current financial situation. Most lenders are willing to renegotiate loan terms with defaulting borrowers. This is far easier and cheaper than repossessing cars and auctioning them.

If My Car Gets Repossessed Can I Get It Back

Its possible to get your car back after repossession. However, you have a limited amount of time to do so. Contact the lender soon after the repossession to discuss the terms of retrieving your car.

Getting your car back varies with each lender but usually involves paying off the remaining loan balance in full within a certain period. Some lenders may allow you to catch up on overdue payments to redeem the defaulted loan. If youre unable to meet the lenders terms for loan reinstatement, they will proceed to sell the vehicle and recoup their losses.

Why A Car Might Be Repossessed By Mistake

Of course, in the event of an unlawful repossession, your first concern will be getting your vehicle back. Then, once you’ve had time to get over the initial shock, you’ll want to figure out why your car was taken. So, in case you’re ever forced to deal with this difficult situation, here are some of the most common reasons for auto repo mistakes:

  • You’re not late with your payments, but a paperwork error or computer glitch makes it look like your loan is in default.
  • You’ve changed car insurance providers, but the lender never received notice of this change. To them, it just looks like you’re vehicle is no longer covered.
  • The repossession company has simply gone after the wrong car.

If you know for a fact that the repo is a mistake, you should immediately contact a consumer advocacy attorney. Even if the lender or repossession company seems like they’re going to be reasonable, communicating with them through a lawyer will help if you want to pursue legal action.

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Vehicle Loans Are Secured Debt

There are two kinds of debt â secured debt and unsecured debt. If you have unsecured debt, the lender canât take away, or repossess, your house, car, or truck if you donât make payments. Medical bills, student loans, and most credit card debt are examples of unsecured debt.

A car loan is secured debt. The loan that let you buy the car is secured by, or attached to, the car. If you donât make your monthly car payments, the company that gave you the loan can repossess your car. Under state law, the company probably may even be able to repossess your car immediately after one late or missed payment. After a certain number of missed payments, it can and will send the repo man out with the tow truck, looking for your vehicle.

You Must Be Given Notice Before Your Vehicle Is Sold

Can Bankruptcy Help You Retrieve Your Car After It Has Been Repossessed?

Your lender has to give you written notice before it sells your car. Lenders must send the notice to borrowers within a reasonable amount of time ahead of the intended sale. Ten days is the minimum amount of time that a court would consider reasonable.

The notice has to tell you:

  • What you need to do if you want to get your vehicle back

  • Whether your lender will sell your vehicle at a private sale or public auction

  • If the sale will be by public auction, the notice must list the date and time of the auction, plus where it will be held

  • If your lender plans to make a private sale, the notice must list the earliest date the lender would make a sale

  • That youâre entitled to an accounting of the debt

  • What, if any, liability you may have for a deficiency

For either type of sale, the date on the notice lets you know your deadline for redeeming your vehicle. Knowing the specific information for a public auction is important if you want to participate in the auction by bidding to buy your vehicle back. You might even be able to get it for less than market value. Friends or family members also could go to the auction to bid on the vehicle.

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Voluntarily Surrender Your Vehicle

Voluntarily surrendering your vehicle, also known as voluntary repossession,” works the same way as regular repossession except you’re initiating it and, as such, you might be able to avoid the fees associated with vehicle’s physical repossession. However, you’ll still owe the difference between your current auto loan and what the vehicle sells for, and your credit score will still take a hit.

Just like you would with regular repossession, you should avoid voluntary repossession at all costs. Contact your lender and take all necessary steps to work out a deal.

How Does Repossession Work With A Rented Or Leased Vehicle

If you cant meet the terms of your loan agreement for a leased vehicle, you dont have the same protection as for a bought vehicle. The loan company is notrequired to let you know before they take back your vehicle. But, you should take a look at your lease agreement to see if there are any unique requirements.

If you have questions or concerns about a leased vehicle that was taken back by a loan company, the Attorney Generals Office may be able to help. Please contact our Consumer Advocacy & Response Division at 727-8400 for more information.

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Determine Whether You Can Get Your Car Back

The lender typically allows you to get your car back before they take it to auction if you make outstanding payments or pay the loan in full. If you have a family member or friend willing to give you a personal loan for the balance due, its an easier path to getting your car back and get back on the road.

If you cant pay back the loan in full, many lenders will work with you to reinstate the loan and adjust the payment schedule or monthly payment amount. Your lender may be willing to set up a new payment plan allowing you to catch up on your missed payments.

How To Recover From A Car Repossession In 5 Steps

My Car Got Repossessed, What Do I Do?

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When your car is repossessed, you may not know why it happened or how youre going to get to work the next day. But you can recover by taking action to take care of your transportation needs and to protect your credit from further damage.

Here are five steps you can take to recover from a repossession:

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When To Get Legal Advice

If you think any part of the repossession process wasnât done right, try to get legal advice as soon as possible. The following are some examples of problems a lawyer might be able to help with:

  • The repossession happened before you were in default on your car loan.

  • A breach of peace happened during the repo.

  • Your lenderâs written notice before the sale was missing information or gave incorrect information.

  • The resale price of your car seems very low and something about the sale process is questionable.

  • Your lender or the repo agent used any false or deceptive tactics to repo your car.

Moving On After Your Car Gets Repossessed

Having your car repossessed is a traumatic experience, but you need to treat it as a learning experience and begin improving your finances.

Start by determining how you can cut expenses in all areas of your life, including auto-related expenses. Driving a fancy, expensive car isnt worth tanking your finances. Opt for a less expensive car or an alternative method of transportation like carpooling to work and taking public transportation.

Your credit will likely take a significant hit too. Your delinquent loan may be sent to collections that can stay on your credit report for seven years. Its important you take steps to repair the damage. Pay your remaining bills on-time consistently and only begin taking on new lines of credit when you can safely afford them.

If youre struggling to pay other bills, you need to reach out for help immediately. Talk with your creditors to set up alternative payment plans and figure out ways to bring boost your income through a side gig or by changing jobs.

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How To Get A Repossessed Car Back

If your car has been repossessed, some states allow you to reinstate your loan, which means that you pay the past due amount and whatever your lenders repossession expenses were. Those payments bring the loan current, and you get the car back. It doesnt remove the repossession from your credit report, but it does get your car back and bring your loan payments up to date.

Some states also allow you to buy back the vehicle by paying the full amount that you owe. This doesnt mean catching up on missed payments, but paying them as well as the remainder of the loan.

You may also be able to buy the vehicle back when the lender auctions it off.

When A Lender Can Take Your Car

The Car Repossession Law and Process in Mississippi

In many states, your lender can take your car as soon as you default on your loan or lease. Your contract should say what could put you in default, but not making a payment on time is a typical example.

Once youre in default, the lender may be able to repossess your car at any time, without notice, and come onto your property to take it. But the lender cant breach the peace when they take it. In some states, breaching the peace includes using physical force, threatening to use force, or even removing your car from a closed garage without your permission.

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What You Should Do To Avoid Repossession In The Future

Despite all the previously discussed measures, the truth is that its very hard to get your car back once its repossessed your lender will almost always prefer to get whatever they can for the car and be done with you. If you are able to get it back, its always expensive. Its very likely, however, that you can prevent a repossession, and its certain that preventing a repossession is easier and more likely than dealing with the mess after your car gets hauled away.

Keep reading to find out what you should do if youre struggling to pay for your car.

Ask The Lender If They Plan To Sell Your Car

After repossession, the lender might keep the car as compensation, but if youre not able to redeem or reinstate, its much more likely that theyll sell it to try to recoup some of their losses. Some states require lenders to tell you if theyre going to sell the car, and if that sale is a public auction, when and where its going to take place. Others do not, but its always a good idea to ask so you can know what is in store for your cars future.

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Repossession & Your Credit Score

My Car Has Been Repossessed What Do I Do?

Having a vehicle repossessed leaves a nasty scar on your credit history, which, of course, affects your overall credit score. Poor credit scores make it difficult for you to do everything from getting another loan to even landing a job.

Learn more about how you credit score affects your life in our page on .

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Understand That Banks Don’t Prefer Repossession

Banks make money by financing loans, not from paying contractors to repo cars and then selling them at a loss. Cars depreciate in value quickly and dramatically. Repossession cases require expensive legal work, selling cars costs money, and lenders are likely never to receive full deficiency payments even through court orders. This reality gives you a lot of leverage if you get into trouble but only if youre proactive before the repossession takes place.

Can I Get My Car Back After A Repossession In Texas

In some circumstances, filing bankruptcy might allow you to get your car back. Otherwise, you have to exercise your limited right of redemption if you want to get it back. Redeeming your car requires that you pay more than just your past-due amount. You have to pay the full amount of your loan balance and all the costs related to the repossession. You can redeem your car as long as your lender hasnât yet sold it. Your lender must include information about how to redeem your car in the notice itâs required to send after the repossession.

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Ask How To Reclaim Your Stuff Inside

The repo agent has the right to take your car, but the personal items inside are yours. In some cases, youll receive an inventory of personal items with instructions on how to retrieve them. In other cases, the repo man might let you collect your belongings right there. Keep in mind that personal items dont include aftermarket add-ons like new stereo systems.

What Rules Does My Lender Have To Follow

Repossessed Cars Port Elizabeth

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.

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How The Proceeds From The Auction Are Used

When a repossessed car is sold at auction, your stateâs laws list who receives the money from the sale, or the proceeds from the auction. Generally, the first thing paid is the cost of selling the car at the auction and the cost of car repossession. This includes the costs of towing and the tow truck while the repo man does his job, storing the vehicle before auction, and attorney fees for the loan company.

After these costs are covered, the loan company needs to use the rest of the money to pay down the auto loan. This money is used to pay fees for late payments, interest on the loan, the loan balance, and any other penalties from the loan company. Any money left over after everything is paid gets returned to you, although this doesnât usually happen.

In most cases, after the auction, there isnât enough money to cover the loan balance after the car repossession costs are paid. Many people donât make a large down payment on their new car, so they donât have enough equity in their vehicle to pay everyone.

Try To Get Your Car Back

Sometimes, the bank will give your car back if you agree to pay the loan back in full, along with all repossession costs. And you will have to do this before the vehicle is sold at auction.

Sometimes, lenders may allow you to reinstate your loan. You might even be able to work out a new payment plan to better suit your budget. Just remember that, no matter what, the repossession will probably not be removed from your credit report for seven years.

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