Repossession of your car can happen even if you
are only one day late with your payment! Voluntary repossession may be a better
option but requires careful consideration of the consequences.
(See voluntary
repossession)
The Federal Fair Debt Collection Practices Act (FDCPA) generally does not apply to creditors (your auto lender), but some State Fair Debt Collection Practices Acts do. If you believe you are a victim of unfair or illegal repossession or debt collection tactics, submit your information to a FREE* Fair Debt Lawyer by:
The debt collector may just be liable to you for statutory damages of up to $1,000, plus any actual damages suffered, plus attorney fees!
Unfortunately, lenders usually have the right to repossess your
vehicle after any late payment (including the very first one). It's a good idea
to always read the fine print in your credit contract because it outlines the
lender's right to repossess your car and what you can be charged for the
repossession. The loan contract must disclose the lender's repossession policy
including when they can repossess and what your rights are if repossession
occurs. Some states have specific repossession laws and these laws are usually
referenced in the credit contract.
The auto repossession process usually goes like this .
. .
- You receive a late payment warning by mail; (but not always
as there is no law that requires this. Only if the credit contract says so, is
the lender required to notify you in writing)
- You receive a follow up call to the above warning;
- You pass some predetermined grace period (look in your
credit disclosure statement for the appropriate number of days)
- You may receive one more warning (usually
by mail)
- You discover your car missing from your home, work, or even
at the mall. (Repo experts usually cruise by your home and work and even look
for your daily habits to determine when and where would be the best place to
repossess your car )
- You receive a notice that your car has been repossessed and
what your rights are including how to get it back.
- If you can figure out a way to pay, you'll have to pay the
repossession fees, towing charges, impound charges, storage fees and various
other fees incurred by the company that repossessed the car. This can
easily run several hundred dollars.
- If you cannot pay the repo fees, you'll lose the car
completely! It's sold at auction and the proceeds are applied to the balance of
your auto loan and the fees mentioned above. If the balance is not paid off
you'll be informed of the balance and that you are still responsible for paying
it off. If there is money left over after the car loan balance and all
repossession fees are paid, don't expect to get any of the profit; the company
can legally keep it.
- Your credit report is updated to reflect the account as a
"repossession"
Keep in mind that repo experts cannot violate any laws during a
repossession procedure. In other words they cannot enter a closed garage to
repossess your vehicle. They can take a car sitting in your driveway.
Voluntarily Repossession
When you purchase any vehicle on credit, the lender retains
important rights in the vehicle until you make the final payment. These rights
are established by the contract you signed and by state law. Failure to make
the first, second or even last payment on time carries serious consequences
because your creditor has the right to "repossess" - take back - your car
without going to court, or without warning you in advance.
However, many states place limits on how the creditor may repossess the vehicle
and they usually spell out how the lender must try sell the vehicle in order to
reduce or eliminate your debt.
First and foremost; talk with your lender immediately
if you are going to be late or miss a payment! Once the vehicle is
repossessed, it's extremely difficult to get back and expensive. Generally
you'll have to pay all overdue payments and any penalties plus the cost of the
repossession and any storage charges incurred as a result of the repo. Many
creditors agree to delayed payments IF they believe you will pay at a later
date.
Voluntary Repossession
Giving the vehicle
back to your lender voluntarily may reduce your creditor's expenses in
repossessing the automobile and it may reduce the amount you will owe the
creditor. BUT, you will still be responsible for paying any deficiency on your
loan, and the creditor may still report the repossession on your credit report.
When is my car payment in
default?
Typically, missing a payment due date by even one day
makes the account delinquent. However, always consult your credit contract for
the exact details. Some creditors do allow grace periods but these are usually not true
grace periods. However, if your creditor did agree to accept a late payment or
to change your payment date, then the terms of your original contract may no
longer apply. That's why it's important to get it in writing whenever you reach
an agreement to modify your original contract.
Repossessing or Seizing the
Vehicle
Generally, your creditor has legal authority to seize your
car as soon as you default on your loan. Once you are in default, your creditor
may repossess your car at any hour of the day or night, without prior notice.
The creditor may also come onto your property to do so. However, the creditor
may not commit a "breach of the peace" by using physical force or threats of
force or breaking into locked buildings. If a "breach of the peace" occurs,
your creditor may be required to pay a penalty or compensate you for any harm
done to you or your property.
Reselling the Vehicle
After repossessing
your car, the creditor can keep the car as compensation for your debt or resell
it in a public or private sale. In either case, you must be told what will
happen to the car. If the creditor decides to keep the car, in most states you
have the right to demand they sell the car instead. If the car is worth more
than the amount owed on the loan, you'll want to exercise this right.
If the car is sold at a public auction, you must be notified of
the date in advance. If sold at a private sale, you will be notified of a date
after which it will be sold. Any resale must be conducted in a "commercially
reasonable manner." For example, a resale price which is below fair market
value may be unreasonable. If this occurs, you may have a claim against the
creditor for damages, or a defense against a deficiency judgment. Lastly, you
may also be entitled to buy back the vehicle by paying the full amount owed,
plus any expenses incurred by the creditor. In addition, you may be able to
reinstate your loan by paying the amount you are behind on the loan plus your
creditor's expenses.
What happens to personal property left in my car?
Personal property does not apply to improvements made to the car,
such as a CD Player, stereo or luggage rack. It only applies to items not
connected to the vehicle. The creditor or whoever repossessed the car
CANNOT keep or sell any personal property found inside. If the
creditor or whoever repossessed the car cannot account for personal property
left in the vehicle, you may be entitled to compensation and should consult
with an attorney.
Click here to present your case to a Fair Debt Lawyer, it's Free & Confidential.
What is a Deficiency Judgment?
It's the
difference between what you owe on your loan and what your creditor receives
from selling the vehicle. Creditors who follow the proper procedures for
repossession and sale are generally allowed to sue you for a deficiency
judgment to collect the loan balance. However, if a "breach of the peace," was
committed, the creditor may lose the right to collect a deficiency judgment. If
you are sued, DO NOT miss the court hearing date because it may be your only
opportunity to defend your position and to get the amount owed reduced or
eliminated.
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