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Repossession Rights

Each year, over 17 million new and 14 million used cars are sold in the United States. With new cars costing an average of $25,000 and used cars nearly $9,000, it is clear that the automobile market is strong and growing. Interest rates on auto loans have also remained low, and many borrowers have taken advantage of the market by purchasing the cars of their dreams. But unforeseen financial setbacks can turn a once manageable car payment into an unbearable financial burden.

Unforeseen financial setbacks can turn a once manageable car payment into an unbearable financial burden

The facts about repossession

Depending on the state in which you live and the details of your contract, a creditor may repossess your car as soon as you become delinquent. Most creditors will attempt to collect the late payment through phone calls and written communication. A "Section 80 Notice" is a form creditors may send to their delinquent borrowers. This notice tells how much is owed and allows thirty days for the payment to be made.

If the delinquency is not taken care of, the creditor may hire a repossession firm to take back the vehicle. This can take place at your home, place of work or wherever the car is parked.

Once the car has been repossessed, the costs of the repossession service and storage may also be added to your debt.

What are my rights?

There are very specific laws surrounding repossessions, and if the creditor and the repossession firm do not follow them to the letter, you may have grounds for getting your vehicle back and perhaps even collecting money for damages. An attorney with a background in consumer financial law can be an excellent resource. The requirement that a repossession firm not "breach the peace," though vague, does have some very specific applications. The repossession company may not:
  • enter a closed or locked garage, or otherwise trespass any property
  • enter into your house, unless invited
  • damage the vehicle during the repossession
  • threaten, commit violence, or touch anyone
  • threaten you with arrest
  • force you to pull over to the side of the road
  • have sheriffs or police present unless the creditor has already sued you
A repossession of an automobile does not include any personal possessions within the vehicle at the time it was taken. However, you may be required to go to the storage facility to make a claim. If personal property is not returned, or if it is damaged or stolen, contact a lawyer immediately. Personal property does not include additions made to the car, such as ski racks or a stereo system.

Sometimes, a repossession is wrongfully executed when the customer is actually current on their payment or has been promised a grace period. This type of repossession may be against the law. You should contact an attorney right away.

Getting your car back after repossession

Once the automobile has been taken, the creditor will send a notice with an estimate of the value of the vehicle, the amount owed and the required fees to get it back. You will have 21 days from the date of the notice to pay the required amount.

If you cannot or choose not to pay, the vehicle may be sold at an auction, and the proceeds of the sale will be applied to the outstanding loan and fees. If there is still a balance remaining and the automobile was valued at over $2,000, you can be held liable for the difference.

If the remaining balance seems unreasonable, many creditors may accept as little as 50 percent and consider the debt paid. Just be certain to get the agreement in writing before you pay.

Some creditors may choose to sue borrowers even after their vehicles have been repossessed. Should this happen to you, don't ignore your creditor. Rather, you should consult an attorney who specializes in consumer finances.

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