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Car Repossession

If you’re behind on your car payments and your creditor is threatening to repossess your car, here are some helpful suggestions.

  • Contact your creditor when you realize that you will be late with a payment. Many creditors will work with you to set up a payment plan.
  • If the creditor agrees to a change in your payment arrangement, make certain you get it in writing. If you don’t have the change in writing, the original contract still remains in effect, and if you are late, the creditor still has a right to repossess.
  • If you miss a payment or default on your contract in any way, such as letting your insurance coverage lapse, your creditor has the right to repossess your car.
  • A voluntary repossession occurs when you return the financed vehicle in an attempt to relinquish your responsibility.
  • Your creditor is not required to give you any advance notice before repossessing your car. The creditor or its repossession agent is allowed on your property to seize the vehicle as long as there is not a “breach of the peace.”
  • If you think your car is in danger of being repossessed, it is a good idea to remove all of your personal items from it as soon as possible. After the vehicle has been repossessed, it can be difficult to get back your things even though the creditor has no legal right to keep them.
  • Once your car has been repossessed, your creditor has the right to ask you to pay the late payments plus the cost of repossession. The creditor may also demand that you pay off the balance of the loan in full.  You may wish to consult with an attorney for advice on your legal rights.
  • If you are not able to pay these costs to get your car back, the creditor has the right to sell it through a public or private sale. Before reselling your vehicle at a public sale, the creditor must notify you of the date, time, and place of the sale. You may attend the sale and bring bidders if you want. If the creditor sells your car at a private sale, the creditor must notify you of the date after which the car will be sold.
  • After the vehicle has been sold, you will be notified by the creditor. If the sale doesn’t raise enough money to cover your loan balance, the difference, which you still owe, is called the “deficiency balance.” If proceeds from the sale exceed your loan balance and the cost of repossessing your vehicle, the creditor must refund the difference to you.

Remember, it is easier to try to prevent repossession before it happens than to deal with it after the fact. If you default on your contract or you’re concerned that you might miss a payment, contact your creditor.