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Home::Advice
What Happens If Your Car Is Repossessed?
Author : Mike Cotter
It's every car owner's nightmare. One day while you are at
work, you helplessly watch as a tow truck hooks up your car and
drives it away. Not only is it embarrassing, but it puts you in
an uncomfortable position--you no longer have a car to get you
to the places you need to go. Maybe you had some major medical
expense that caused you to be late with your payments, or
perhaps it was just bad money management, but either way, you
need to understand what rights you now have. Read the following
information to help you better understand what steps you need to
take now.Prevention
It's much easier to prevent repossession than it is to reverse
one. It seems that once the repossession is in process, it
begins to take on a life of its own and it's almost impossible
to stop. On the other hand, most lenders will be willing to work
with you for a short amount of time if you are having problems
making your payments. If you find yourself in this situation,
call your lender and explain the circumstances that are
preventing you from making your payments on time. They may
allow you a short grace period, or may even create a new payment
schedule that you can stick to (If they do this, be sure to get
it in writing!). However, always talk to the bank when they
call. Do not hide behind caller ID or use voice mail. A bank
that thinks you are working with them will bend their rules on
repossession much more willingly if you are communicating with
them on a regular basis. Generally, the bank will be looking to
repo the car sometimes between when you are 30 to 60 days late
on you payment.
If the lender simply won't work for you, and you know that
repossession is just around the corner, then you may consider
turning in the car on your own. Why? Because if your car is
repossessed, you will not only be responsible for the balance
due after it's sold, (more on this in a moment), but also the
costs involved in the repossession, such as towing and
manpower. Don't think you can hide your car from the repo man
forever. Repossession agencies handle hundreds to thousands of
repossessions a year and are experts. They know all the tricks
that borrowers use to keep their cars from being
towed.Repossession
If you default on your loan, the lender will have the right to
come and take your car away. Depending on the state you live in,
they may or may not be able to come on your property to do so,
without advanced notice. They are not allowed to create a
"breach of peace," while repossessing your car. In other words,
they can't make a big scene and let everyone around you know
that they're taking your car because you didn't make the
payments! If you have personal belongings in the car, the
lender will have to return them to you in good shape, or
reimburse you for them should they disappear. (Again, the laws
vary per state, so be sure to find out what they are in your
state.) Sell
Once the lender has your car, they will likely try to sell it in
order to recoup at least some of the loan balance. By law, they
will have to inform you when and where your car will be sold,
and allow you the opportunity to buy it back. To do so, you
will have to pay the entire balance due, plus any expenses
associated with the repossession process.
If you feel that the car wasn't sold responsibly, you have a
right to dispute it. In other words, if you feel that the lender
didn't try to get an honest price for the car, you should talk
to an attorney about your options.Deficiency
When the lender sells your car, you will be responsible for the
difference between the loan balance and what the car was sold
for. For example, if your loan balance (plus the fees and unpaid
interest) was $10,000 and the car sold for $6,000, you would
still owe $4,000 to the lender.
The key here is to keep careful record of the entire
repossession process. When you are in front of a judge being
sued for the deficiency amount, it will be your only chance to
dispute the lender's claim that you still owe them money. If you
can prove that they acted wrongly in either the act of
repossession, or while selling your car, the judge may dismiss
that balance. You can also sometimes dismiss the balance with a
bankruptcy filing.
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