Life circumstances, such as job loss, divorce, health issues and death, can make it difficult, or nearly impossible, to keep up with financial obligations. Once we fall behind, it’s difficult to catch up. Then collectors begin to call, vehicles get repossessed, and our credit reports are impacted.
When borrowers fall behind on car loans, there may be options to discuss with the auto lender, such as deferring payments for a few months and having those payments placed at the end of the loan. Regardless, it would be beneficial to address late payments with your lender and discuss available options. If you have fallen behind, the lender may choose to repossess the vehicle.
Car repossession laws vary from state to state. Lenders may have the right to repossess a vehicle as soon as the borrower misses a payment, fails to maintain adequate insurance, or defaults in another way expressed by the contract. Lenders usually do not have to warn you that they are planning to repossess your vehicle.
A repossession company is permitted to come to your property. However, they cannot breach the peace, damage your property or vehicle, use violence, break into a locked garage or fenced area, or repossess your vehicle based on faulty information.
Most states require the lender to tell you what it plans to do with the vehicle and any rights you have. This information usually comes in the form of a letter, called a Repossession Notice, promptly after the repossession occurs. It will detail where you car was taken and inform you of when to collect any personal property left in the vehicle. The repossession notice will state when your vehicle may be sold and if the sale will take place at an auction or private sale.
After a repossession, the lender will offer you the option to redeem your vehicle by either paying the past due payments and repossession fees, or paying off the entire balance of the loan.
If you are unable to make the required payment to redeem your vehicle, the lender will it. Although they are required to get the best price possible, in most cases, the sale amount will be less than the outstanding balance owed on the loan. This situation often results in a “deficient balance” that you will be responsible to pay to your lender. The lender may choose to sue the borrower for the deficient balance.
Most lenders will report auto repossessions to the credit bureaus, whether the repossession was voluntary or involuntary. The listing can appear on your credit reports for up to 7 1/2 years.
Seek Legal Help
For more information on laws protecting borrowers from wrongfully repossessed vehicles, Click here.
Flitter Milz is a consumer protection law firm that represents borrowers that have had a car, truck, motorcycle, boat or RV repossessed within the past six years. We will provide a FREE consultation and evaluate whether your consumer rights have been violated. Contact Us today.