Q: How many payments do I have to be behind before they can repossess my car?
A: Technically, you only have to be late or in breach of the contract for a company to repossess your vehicle. The terms of your contract determine when you are in “breach” of the agreement. Once you are in breach they can legally repossess the vehicle. However, most car lenders will not repossess a vehicle after one missed payment if you have never been behind before. Ultimately, they would prefer you pay them. But if you are a chronically late payer or have provided information to them that indicates you cannot afford the vehicle, this can influence how quickly they will move to repo the vehicle.
Q: How can I stop a repossession?
A: You have several options. The most obvious is to bring the payment current. The next option is to gain an agreement with the lender to catch up on the payments over time or forebear the payments to the end of the loan. When the first two options are not possible or don’t solve all your problems, a Chapter 13 bankruptcy restructuring can reorganize all your debt including your vehicle loan and possibly lower the amount you owe and reduce the payment amount.
Q: What happens when a vehicle is repossessed?
A: Generally, when a vehicle is repossess it is held by the towing company for a certain amount of days during which the lender will consider returning it if you pay the missed payments plus the towing and storage charges. After a certain amount of time, the lender will the instruct the vehicle be sent to an auction company for public sale. Auctions companies can be located from Pennsylvania to North Carolina.
Q:What happens after the vehicle is auctioned?
A: The vehicle is generally sold for much less than fair market value at the auction due to the vehicle being sold “as-is”. The amount recovered by the lender is then deducted from the amount you owed. However, the additional costs of the auction and repossession are also billed to you. Once this amount is calculated you will generally receive a demand letter requesting the balance be paid. It follows that if you couldn’t afford the monthly car payment you won’t be able to afford the “deficiency” balance. The other sad part about repossession is that if they are likely to entertain you paying the balance off in monthly payments you will find the monthly payment amount they want is as much as the monthly car payment before the repossession. That doesn’t make a lot of sense given that you could afford the payment to begin with and now have to consider financing a replacement vehicle. Crazy huh?
Q: How does a lender repossess a vehicle?
A: As you have seen in the movies, the preferred time is to repossession a vehicle in the night when the unsuspecting owner will not interfere with the pick up. The law requires that the repossessor no violate the peace. This means they cannot force you to turn over the keys or pull you out of the car. Generally, if the company encounters you when they are attempting to secure the vehicle they will try to trick you into being cooperative by lying about how easy it will be to get it back. Also, if you garage the vehicle, thereby making it difficult for the repo company, it is not unheard of for them to follow you to the store or your work and repossess the vehicle once you depart and are out of sight.