If you run into financial difficulty and you can’t make your car payment, the creditor probably won’t extend much grace to you. A long as you owe money on the vehicle, the creditor has the legal right to repossess it if you default on the payments. Although losing your car won’t be pleasant, you can handle a car repo with class and land on your feet again.
Allow the creditor to take possession of the vehicle without interfering. The creditor does not need to inform you prior to taking the car and you may not have the opportunity to remove any personal property from the vehicle. You must cooperate with the creditor.
Contact the creditor to arrange to receive any personal property that was inside the vehicle. Some states may require the creditor to issue a report about your personal property. Arrange to get your items back from the creditor.
Find out what the creditor does with the vehicle. Some states require the creditor to inform the consumer about the outcome of the repossession, including the date of a planned sale, to enable the consumer to attend to bid on the car. If the creditor sells the car, a shortfall between the amount you owed and the selling price of the car results in a “deficiency.” The creditor may sue you to recover this deficiency. If there is a surplus, the creditor must give it to you.
- If you can’t make a car payment, call your creditor immediately. You may be able to forestall repossession by communicating openly with the creditor. Request a later payment date and get the agreement in writing.
- According to the Federal Trade Commission, the creditor cannot “breach the peace” in the process of repossessing the vehicle. This includes using force or threats of force and entering an enclosed garage. If the creditor commits this breach, a court may award you compensation for any damage done.
- Contact your state Attorney General to learn about specific repo laws in your state.
- Read your loan papers carefully so you understand what constitutes a default. Often just one late payment may be enough to set the repo wheels in motion.
- Some financed and leased automobiles come with a disabling device that prevents them from starting if the consumer defaults on payments. Not every state permits the use of these devices.
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