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My car has been repossessed! What now?

It happens more often than you might think. After months, and in some cases years, of making steady payments on a car, it might not seem like a serious offense to put off a payment during hard financial times. But the consequences can come quickly, no matter how dedicated your payment history has been. You might walk out your front door one morning to find your car has disappeared overnight.

Why was my car repossessed?

Car repossession occurs when you are considered to be in default of the loan you took out to purchase your car. The lender with whom you leased or financed your car is generally given a security interest at the time of the financing, which basically gives them the right to have your car repossessed without notifying you if you have done something that they feel constitutes a default. More often than not, the reason is missed payments.

Is car repossession legal?

Your lender and the repossession agents they work with are bound by law to act within the legal repossession specifications of your state. These laws vary depending on your location, so if you feel that the actions taken to repossess your vehicle did not abide by the laws of your state, it will be in your best interest to contact an attorney who has experience in this field. If it is determined that proper procedures were not followed, you might have grounds to reclaim your car or seek financial damages.

The basic rule for companies that would like to repossess a vehicle states that they may not "breach the peace". There are several examples of what this term can mean. A repossessor cannot:

  • Enter your house without invitation
  • Threaten to have you arrested or otherwise threaten physical violence
  • Commit physical violence or make physical contact with anyone present
  • Enter a locked garage or storage building
  • Damage your vehicle during the act of repossession

My car is already gone. What should I do next?

In cases where you are aware that you were late or behind on your payments, the timing of the repossession is probably more shocking than the actual repossession itself. But in some states, there can be stipulations built into your loan that allow your lender to repossess your car for things like a failure to keep current car insurance.

Either way, your first action should likely be calling your lender to assess the situation and find out what you will need to do to be back in their good graces. It's important to do this as soon as you are aware of the repossession. An attorney can help you with this step.

What could happen to my car once it's been repossessed?

Once your lender has your car, they have the right to sell it in order to recoup the money you still owe on your loan. Lenders are required by law to abide by standard sale procedures, but this doesn't mean that they are required to sell the car in question at what would be considered the highest price it is worth. When your car is sold at a price lower than the remaining balance of your loan, the difference is known as a deficiency balance, which you are still legally obligated to pay.

The best way to avoid repossession is to pay every single scheduled payment in full and on time. This is your best protection against being involved in the typically messy business of getting your car back and settling your loan, which will usually include additional fees once your car has been repossessed and will leave a black mark on your credit history for the next seven years.

If, however, you feel that you have clear legal grounds to fight the repossession or if you feel that the manner of repossession was a breach of peace, your best option will be to hire an experienced attorney to assist you in pursuing legal action.

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