Auto Repossession Process and Your Consumer Rights
When you are going through the auto repossession process and your consumer rights are violated you have remedies. Fort example, if the a breach of the peace occurs when the vehicle is being seized the repo may be invalid, maybe saving your vehicle! But the exact phase of the repossession process that you are in will dictate what your possible rights and remedies are.
There are three stages of the repossession process the way we see it:
- Your vehicle hasn’t been repossessed yet but you are worried it may be soon because you’ve stopped making payments or have fallen behind on payments;
- Your vehicle was recently repossessed and you don’t know what to do;
- Your vehicle was previously repossessed and you’re now dealing with the fallout like a deficiency judgment, collections and credit report problems.
You may want to talk to a consumer protection attorney who will evaluate whether a violation of your basic consumer rights occurred and whether you are entitled to receive money. Representation may be inexpensive or even no cost and could help save your vehicle or get it back. Read further here about your possible options depending on what phase of the repossession process you are in. Or for immediate help you may want to contact a consumer protection attorney for a no cost consultation.
Before the Repo
- You receive a late payment warning by mail (but only if the credit contract requires such notice). However, this notice could violate state or federal law so save all letters and notices you receive).
- You receive a follow up call to the above warning. These calls often violate the Telephone Consumer Protection Act which could entitle you to $500 to $1,500 cash per call—maybe even enough to pay off the car loan! Save all messages and document all calls.
- You pass some predetermined grace period (look in your loan contract/credit disclosure statement, which by the way may just violate the Truth In Lending Act which could entitle you to damages or a credit on your loan.
- You may receive one more warning by mail or phone (again save all letters and voice mails, and document all calls).
- You go outside only to discover your car is missing—from home, work or somewhere else. Keep in mind that repo experts cannot violate any laws during a repossession procedure. For example, they cannot enter a closed garage to repossess your vehicle but can take a car sitting in your driveway.
- You receive a notice that your car has been repossessed and advising you of your rights including how to get it back. SAVE THIS NOTICE as any missing or incorrect information on it may benefit you.
- Once the vehicle is repo’d you’ll need to pay off the full past due balance, plus repossession fees, towing charges, impound charges, storage fees and various other fees incurred by the company that repossessed the car or the creditor to get it back. This can easily run thousands of dollars.
- If you cannot pay the balance owed you’ll lose the car completely! It’ll then be sold at auction or private sale with the proceeds being applied to the balance of your auto loan.
The Repossession Fallout
- If the balance not satisfied and fully paid off after sale you’ll be responsible and the deficiency will be sought from and against you. You can expect to be collected on or even sued.
- And of course your credit report is updated to reflect the account as a “repossession” which will make it hard to get another vehicle or loan, or even a job!
Where exactly you are in the repossession process will dictate your possible rights and remedies. Depending on what’s happening or happened you may want to contact a consumer protection attorney for a confidential consultation.
Repossessing or Seizing the Vehicle
Your creditor, lender or lessor obtains important rights against you when you finance or lease a vehicle. These rights and duties are established by the contract you signed and your state’s laws. 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.
But even when being repossessed you maintain your consumer rights . For example, the creditor may also come onto your property or otherwise commit a “breach of the peace” during the repossession 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.
When this and other rules are violated you may be able to your vehicle back and/or the creditor may have to pay you money damages! Where exactly you are in the repossession process will dictate your possible rights and remedies.
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 the vehicle?
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 contact a consumer protection attorney for a free consultation..
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.
Electronic Disabling Devices
Some consumers may not be able to obtain financing unless they agree to having an electronic device installed that prevents the vehicle from starting if payments aren’t timely made. Depending on the loan contract and your state’s laws such devices may be considered equivalent to a repossession or a breach of the peace which could affect your rights. Such devices can also violate TILA when inadequately disclosed.
If you are dealing with any stage of a repossession experienced consumer protection attorneys may be able to provide you inexpensive or even no cost representation to help save your vehicle or get it back. Learn if a violation of your basic consumer rights has occurred and whether you are entitled to receive money damages! Get a free, no cost and no obligation consultation.
(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.
Although the Federal Fair Debt Collection Practices Act (FDCPA) generally does not apply to creditors (your auto lender), many states have specific repossession laws (usually referenced in the credit contract) and/or state fair debt collection laws that do cover repossessions. Further, Truth In Lending Act violations can provide offsets or deductions and reduce the deficiency balance you owe.
If you are suffering the fall out from a repo, see if you qualify for FREE* legal representation by getting a FREE* Fair Debt Case Review or by calling toll free 888-FDCPA-LAW (888-332-7252).