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Repossession Laws: What Is Required to Repossess

(See voluntary repossession)

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 . . .

  1. 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)
  2. You receive a follow up call to the above warning;
  3. You pass some predetermined grace period (look in your credit disclosure statement for the appropriate number of days)
  4. You may receive one more warning (usually by mail)
  5. 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 )
  6. You receive a notice that your car has been repossessed and what your rights are including how to get it back.
  7. 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.
  8. 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.
  9. 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.

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!

confidential informationThere may be instances where discussing your situation over a public forum could potentially compromise your interests. On these occasions we will contact you directly via email in order to answer your inquiry in a confidential manner.

10 comments

  1. Creditor reported my vehicle on my credit report as a repossession. However. I am still in possession of the vehicle

  2. Car was repossessed… Paid loan up to date…. Car release was sent…. How long can they keep your car… Trying to pick ours up but the tow company is giving us the run around!!

  3. I believe I may need additional help due to I am having to pay 14,000 girl a car they sold for 900 and I was never advised of when the car was being sold or fir how much please help 5055502665

  4. Hello…my car was repossesses as default due to the fact of a refferal program with Drive Time which apples $200 credit to you account for each referral….I gave the company two referrals and wait 3 months for them to acknowledge (granted the verbage states credits would be applied on your “next payment ” I continued to pay call in and go into the facility to inquire about referrals….my two referrals even made contact …so after three months I was finally told my referrals have been done …I made a payment of $88 as my note was $219 biweekly and $400 in credits for referrals ….or so I thought untill car was repossesses… I have never missed a payment and would have paid if I known the credits wasn’t applied per their corporate office..I am a good customer …I gave them business and no one is willing to do right by their promises… I have a GPS system in the car that ” per the dealership” would alert me with a beep or put a kill switch on the car..no letters email in thing to let me know there was a problem…this cannot be fair that I have gone above with this company n they lied and took my money ..Please is there any thing I can do !

  5. My daughter car was repoed for 336 not paid I called them for pay off since jan no call back it’s also on receipts that I wanted to no pay off the still not have contacted me repoed daughter car yesterday in wouldn’t key her have her purse or personal belongings in the car now saying that I iwe a lot more 350 for repo cost and late fees like I ssid I have been calling them since jan they keep saying they the will get back to me in havent

  6. My car was repossessed. I did not receive notice prior to the repossession and had been working with my credit union to get caught up. Luckily, the man who repossessed my vehicle allowed me to get my belongings out of it. While getting my belongings out of my car, I attempted to contact the man I had been working with. I was unable to get ahold of him and found out that at the time he was on the phone with the man repossessing my vehicle. I received a notice two days later telling me that I had 10 days to pay my loan in full or it would be sold. That was the last I heard regarding the repossession until today. The man who repossessed my vehicle contacted me and informed me that I had the right to any amount over my loan that the vehicle was sold for (minus repossession fees). He then stated that he had been in contact with the credit union and was told that they would not be giving me any money and they had never refunded any money in repossession cases. He continued to state that he believes I should obtain an attorney and would be happy to provide all information regarding his interaction and files with my case and the credit union. He also provided me the name of the action company that sold my vehicle. I contacted them and was told that the vehicle was in fact sold but I would need to contact the credit union for the amount it sold for. I have not received any information regarding the auction and was not given the opportunity to buy it back. Should I contact an attorney based on the laws that were not followed?

  7. From the research I have done the last couple days I would say yes. I started by googling “car repossession in the state of _____” look for the government websites, although others, like this one, have also proved helpful. Check your state Attorney General site, too. Good luck!

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