Protection from Repossession
The Servicemembers Civil Relief Act (SCRA) provides special protections for active service members that have defaulted on car loan payments. To qualify, servicemembers must have signed the loan agreement, and paid at least the deposit or first installment payment, before entering military service. To repossess a vehicle, the lender must obtain a court order.
Reasons for Repossession
Vehicle repossessions occur for a number of reasons. Most often, a vehicle is repossessed due to missed payments or the lapse of insurance. When a car is repossessed, lenders need to follow the law, whether payments were missed or not. If the lender overlooks the law, the servicemember may bring a lawsuit against the lender.
Requirements AFTER Repossession
After a vehicle has been repossessed, the lender is required to send proper notices to the borrower. Shortly after the repossession, the lender will send a letter called a Notice of Intent to Sell Property, which confirms the repossession occurred and details terms for to retrieve the vehicle. If the borrower is not able to meet the terms, the lender may choose to sell the vehicle at an auction or private sale. Once the sale has taken place, the lender will send a second letter called a Deficiency Notice, which informs the borrower of the sale price of the vehicle and any remaining balance due. If the borrower is not notified properly, there may be grounds to file a lawsuit against the lender.
Credit Reporting and Car Repossession
If a servicemember’s vehicle has been repossessed, he or she may face loss or denial of a security clearance, or other types of punishment based on mismanagement of their finances. In addition, credit reports may list delinquencies or the repossession and lower credit scores, which make it difficult to obtain a new loan.
All consumers are entitled to receive one free credit report every twelve months directly from Transunion, Experian and Equifax. Check your credit reports , and make sure the information is accurate.
Seek Legal Assistance
Servicemembers that have fallen behind on payments for auto loans and are facing repossession should seek the advice from a qualified consumer protection attorney to advise on their consumer rights.
Flitter Milz is a nationally recognized consumer protection law firm who knows the laws to protect borrowers from wrongful repossession and inaccurate credit reporting. Contact us for a no cost consultation.
Pictured above: Attorneys Cary Flitter (center), Andy Milz (left), Jody López-Jacobs (right).