Anytime you borrow money to buy a car, you should know that:
- The lender can repossess if you miss a payment or for any default (a violation of the contract).
- The lender can repossess without advance notice.
- After car repossession, the lender might be able to accelerate, meaning the lender can require the borrower to pay off the entire balance of the loan in order for the borrower to get the vehicle back.
- The lender can sell the repossessed vehicle at auction.
- The lender might be able to sue the borrower for the deficiency if it sells the car for less than the borrower owes. This is true even in voluntary car repossessions.
- The lender cannot commit a "breach of the peace," for example, breaking into a home or physically threatening someone, in the course of a car repossession.
The bottom line is if you want to know your rights, they are listed on your security agreement. This document you had to sign when you got a car loan. This is the document that the lien holder gives to the DMV to place a lien on your car. It will go over what the lien holders rights are in the event of default, and what your rights are. So find the documents you signed when you got the loan, or ask the lien holder for a copy and read it, it is the most important document you sign when you get a car loan.
If you know you're going to be late with a payment, talk to the lender to try to work things out. If the lender agrees to a delay or to modify the contract, be sure you get the agreement in writing.
Some states have laws that give consumers additional rights. Contact your state or local consumer protection office for more information.
Points made by other contributors
- READ THE CONTRACT. Lenders go to a lot of trouble to make sure their contracts and other paperwork are LEGAL so you can't get out of a loan because the paperwork wasn't right. They may not tell you all your rights, but they will tell you ALL of theirs.
- Decide what you can afford to pay and have a bit of room to live. Then make them the offer. Think about it BEFORE you talk to them and make up your mind that you are willing to pay that much each (week, month, year). When you talk to the creditor don't cave in to the pressure they put on you to pay up. They can ultimately garnish your wages but why should they if you will pay them the money without it. By the way, they can't put you in jail.
- Call the lender and make them an offer to settle now. They would rather have money now than have to go through the collections, judgment, garnishment etc. routine. All you can waste is time and a phone call. They probably have an 888# so you won't even be out a phone call.
- The worst part I see is the ability to give you and the IRS a form 1099 for whatever they DONT collect from you. It basically says the lender forgave you X number of dollars, so that forgiven money is treated as INCOME to YOU. Example; you owe $10K on a car, it disappears, lender can't collect. Two years (or whenever) the lender sends you a 1099. You have moved six times since the last address the lender had for you so it gets returned. You never receive it. BUT the IRS gets their copy and bills you for $10K in unreported income and penalties. You were expecting a huge refund that year and the IRS gets it. NOT fun.
I lost a large repo account for accidentally calling a debtor's father at 200am one time. Law says you can approach at any reasonable time usually aften 1000pm I quit. UNLESS, there are lights on, folks moving around, they are out in yard etc. Knocking the door after being told "debtor doesn't live here" is not cool. telling anyone but the debtor about their personal info is not cool. Okay, now where did he get your car from? Surely NOT your parents home? Or did they tell him where you were?
Unfortunately, People get behind and cars get repo'ed. I myself repo vehicles. I know you probably all hate me for that but I have also had a vehicle repo'ed in the past. We all have times in life when things just suck but If I may give you'll some advice. 1) Don't ever perchase a vehicle for a family member, they really don't care about your credit, they didn't care about their own or they would have probably got the loan themselves. 2)If a repo person calls you to find out where you are, they will probably have your vehicle with 24 hours. So, if they say call your lender to try and stop it, I would call. There's always hope to call if off. The banks loose money when a car is repo'ed. 3)Even if you think you have tried everything, call a local bank or your bank and try to get it refianced with someone eles. There's always someone out there willing to lend money. Gook luck to all of you, hope I don't have to repo your car.
I just read the following answer by anonymous to the question concerning your rights in a repossession:
"I am a repo man, and ironicly this happend on a case last week. The debtor (you in this case) filed for bankruptcy at 8:00am. I repoed his car at 7:30pm that night. After a few days on the phone with his laywer, and bank, the car was returned at the descretion of the bank. So, if you file before your car is repo'd, you can keep the car for that period of time. Your report will show what the bank wants to say, call them about it. Once your car is repo'd that's it, bankruptcy cannot help."
Anonymous is mistaken -
Even after a car has been repossessed, if the person whose car was repossessed then files bankruptcy after the car has been repossessed, and if they file for bankruptcy after the car was repossessed but BEFORE the car is then resold to another person, it is possible to compel the creditor to return the car to the debtor.
The reason for this is that the debtor can file a motion asking the car to be returned to the debtor because by repossessing the car right before the bankruptcy, the repossessing creditor is placing itself in a better position than other creditors (it is called a "preference"), and the court on that basis can order the car to be returned.
Breach of the Peace: Taking the vehicle from driveways, open carports, and parking lots at work is generally allowed. But the repossession company may not:
- enter a closed or locked garage, or otherwise break and enter any property
- enter into your house, unless invited
- damage the vehicle during the repossession
- threaten or 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
True to all of the above and including:
- If you tell them to get off your property, they MUST do so.
- Cannot block or disable the vehicle.
- Cannot misrepresent themselves. Giving another name or state another occupation is illegal.
- If you decide to surrender the vehicle, you are allowed to obtain all personal items from the vehicle and to remove the tags. The tags are registered to the owner, and the owner is responsible for them. Also, remove the registration and insurance cards.
- If the repo man fails to abide to any of the above,(including the above post) call the police and have them arrested. The rights are with the property owner, and any violation including "Breach of Peace" will NOT be tolerated by any law enforcement officer!
- Read the terms of your loan thoroughly before you sign. It's a lot of boring fine print, but it's important. I was surprised to find my contract included my permission to let the bank onto my property to take my car should I default! So I had basically signed away my right to refuse to let the repo man into my closed garage!
- I was a police officer in Milwaukee for a number of years. I retired in 1984. So, my answer may be dated. When people called us to say that their garage was broken open and their vehicle was stolen, we told them that it was a civil matter and to talk to the district attorney if they wanted. We always received a phone call after the repo men had left, so we knew what happened to their vehicle and why. When we informed them that their vehicle was repo'd by the loan company, they usually just hung up. I was never called to settle a dispute if the repo people were confronted because that never happened in my 25 years. The repo people are good at their job and we never had a confrontation.
- Please check out these Ohio Statutes:
Regarding Ohio not having a breach of the peace law, your repo man is mistaken.
Please see below-these are Ohio Laws verbatim-
Section B-2 - Would indicate that there is codified in Ohio a breach of the peace statute.
1309.609. (UCC 9-609) Secured party's right to take possession after default. (A) After default, a secured party: (1) May take possession of the collateral; and (2) Without removal, may render equipment unusable and dispose of collateral on a debtor's premises under section 1309.610 of the Revised Code.
(B) A secured party may act under division (A) of this section: (1) Pursuant to judicial process; or (2) Without judicial process if it acts without breach of the peace.
Also whoever said that the repo man -) Cannot block or disable the vehicle.( Is not fully informed re Ohio law pursuant to 1309.609 (A)(2) which states that the repo man can bust up your stuff. (render equipment unusable in legal terms).
I am the sales manager & collections dept. of a small dealership in Seattle. We finance many of the cars we sell ouself (inhouse). I have done many repo's myself when they are easy(like when the car is near the dealership and we have extra keys and can just drive the car away). The people who live farther away or when the car is blocked in we use a repo company. In Washington we legally can repo a car at 1 second past midnight if a payment was due that day. We can open a gate to remove a car as long as the gate isn't locked. We cant move another car to get to the repo car. We cant open a garage and take the car, that would be breaking and entering. If the people protest we cant take the car(that's why its often done at night,so you don't see the people.
People may remove all personal belongings from a car after its been repoed, as long as they don't devalue the car. They cant take back fancy wheels they might have put on, remove the stereo or speakers, seats, etc. If they have a speaker box and amp, they may remove that.
Most repoed cars are sent to wholesale auction(dealer only) where they sell for about 30-40% of what you paid for it 1-2 years ago. If the car is resold for more than you owe(in Washington anyway), they must pay you back the difference. If you owe alot the car will be cleaned up before it goes to auction so they can get back more of what is owed, but if you do not owe very much they leave the car dirty and full of grabage to insure a low selling price so they do not have to refund you any money.
Many times these laws are taken loosely or bent to get the car back, I would guess, always having followed the law to the letter ourself. You must remember there are some people who have had 5 or more cars repossessed and know the laws and try to use it to keep their car. They do not intend to pay for a car when they buy it, they then try to hide the car, trade cars with a friend, block it in their driveway, etc. Usually we can spot these people before we let them buy a car, their only concern is the down payment, they don't care at all about the monthly payments or interest.
Many small dealerships do reposes their cars once a payment is only several days late. We generally don't sent a car in for repossession until they have not paid in 2 months and they will not return our calls or letters. If they have called to let us know they were having problems or sent in at least part of a payment we may wait a while longer but once a 3rd payment is missed the car is sent in to be picked up for sure. It is expensive, we usually spend over $300 to get a car picked up from a repo company. We would much rather keep the car sold to the person who bought it, but there comes a time when we realize we may not ever get any more money from the person and we either send them to collections, repo the car, or write it off as a loss. Typically a repoed car is very dirty, broken headlight, taillight or other damage not there we we sold it, not taken care of, full of garbage and has hardly enough gas to make it to a gas station.