Having a vehicle repossessed can be detrimental to your credit and your quality of life. Chances are that you need your vehicle to get to and from work. A vehicle repossession can disrupt your life, significantly damage your credit score, and create a multitude of problems for you.
What is Repossession?
Repossessions occur when an individual defaults on a loan. This is most often caused by late payments but can also happen when an individual fails to obtain adequate insurance for the vehicle or fails to meet other conditions in the loan. The creditor is then able to repossess the vehicle. In most cases, creditors are not obligated to provide notice before seizing the vehicle. This prevents individuals from attempting to hide or damage the vehicle.
Can I Get My Car Back?
There are a few options for getting your vehicle back after it has been repossessed. You are allowed to redeem the car, which means that you would have to pay back the entire amount left on the loan, as well as any repossession fees. If your creditor agrees, you may be able to reinstate the loan by making up any missed payments. Filing for bankruptcy will result in an automatic stay, which will prevent the creditor from selling the vehicle without obtaining court permission. You may also be allowed to buy the vehicle back at auction.
What Must Creditors Do?
There are several steps a creditor must take to legally repossess a vehicle. Though they don’t have to provide notice prior to seizing the vehicle, they must notify you after. They must also notify you before they sell the vehicle. You are entitled to a statement following the sale of the vehicle.
Creditors are not allowed to “breach the peace” which means that they can’t threaten or use physical force to repossess the vehicle. In some states, this includes retrieving the vehicle from a closed garage. They must also show that any sale of the car is “commercially reasonable.” This means, although they aren’t required to obtain the highest possible price, they can’t get a ridiculously low amount and sue you for the remaining balance. If they have performed a commercially reasonable sale and there is still a remaining balance on the loan, however, you will be responsible for it.
Repossessions are a serious matter, so you may want to consider hiring an experienced attorney when undergoing financial difficulties. Repossessions significantly hurt your credit score and will make it difficult to obtain another loan. Bankruptcy or refinancing may be the best solutions when you become unable to repay your current car loan. To learn more about your best options to avoid repossession, contact us at LeBaron & Jensen today!