Vehicle Repossessions and Bankruptcy

Having easy access to a vehicle is essential for most of us to get to our jobs, schools, grocery store, etc. Therefore, having a vehicle payment is the most common type of consumer secured debt. Since it is a secured debt, the lender has the right to repossess the vehicle if you get behind in your payments. Sometimes as early as one missed payment, although that rarely happens. Contacting a bankruptcy attorney can stop the legal process and help you decide if filing bankruptcy is the best course of action for you.

Repossession Process

It’s relatively easier for the lender to repossess the vehicle than it is for a mortgage company to foreclose on your home or the credit card companies to take legal action against your bank accounts. A lender can come onto your property, hook the vehicle up to a truck, and haul it away. In some states, you are required to maintain vehicle insurance at all times. If you lose coverage of your vehicle from your insurance company, your finance company can legally take possession of your car.

After the first missed payment, you will usually receive a letter or a phone call reminding you to make a payment. According to your contract, there may also be a late fee included. If you fail to catch up on the payments, the lender may act to come on your property day or night and repossess the vehicle.

Cannot Enter your Closed Garage

A lender or a third party acting on behalf of the lender can come on your property to take the vehicle, but they cannot enter a closed garage without your permission. They are also not allowed to use force or threaten you. If these laws are violated, you have the right to seek legal damages against the lender or the third party. Any property that was inside your vehicle at the time of the seizure is still your property. The lender must make every effort to protect your belongings and let you know where you can retrieve it.

If you do not catch up on the payments, the lender can decide if it wants to sell the vehicle. The lender is required by law to let you know when and where your vehicle will be sold at auction. You can choose to bid on your car. The sale must be commercially reasonable and not sold below the fair market price. If the lender sells the vehicle far below the fair market price, you may be able to claim damages against the lender and dispute any deficiency judgments you would be responsible for the remaining balance of the loan.

If you are behind in your vehicle payments and worried your car would be repossessed, contact an Elk Grove bankruptcy attorney to stop any repossessions or other legal actions taken against you.