Repossession Rights

If you have experienced the horror and embarrassment of having your vehicle taken from you, you still may have options to either retrieve your vehicle or work out an arrangement on any deficient balance owed. Understanding your repossession rights can give you an advantage as you work with your lender to find a mutually beneficial outcome.

Can you Hide your Vehicle?

If you suspect the repo man is hunting down your vehicle, you might be tempted to hide it from view. This is a tricky proposition for a couple of reasons.

First of all, while you may have the right to park your car a few streets over or in a different parking lot, you may at best delay the inevitable by a couple of days. Repossession agents are increasingly utilizing technological tools that identify vehicle license numbers from hundreds as the agent drives through a parking lot. It may just be a matter of time. Plus, if they believe you are hiding the vehicle, you may give up all negotiating rights once the vehicle is repossessed.

If you deliberately make extraordinary attempts to hide the vehicle, then your actions may even be illegal. No debt is worth going to jail over. Debtors prisons are largely a thing of the past, but breaking the law to hide collateral could land you in some really hot water.

Repossession agents have certain protections that allow them to seize a vehicle under specific circumstances. You also have rights against certain repossession tactics. Your exact rights depend on your state.

Can you Block a Repossession?

If your car payments are just one aspect of your financial situation that are unaffordable, then you may have greater protections against repossession as well as legal action for other defaulted debts. Insolvency may qualify you for personal bankruptcy protection.

Filing for bankruptcy protection means that you have an automatic stay against certain legal actions. Once your lender receives notice that you have filed for bankruptcy, they may not repossess your vehicle. They must instead go through the bankruptcy court to seek payment of the loan balance in full or in part.

Bankruptcy can give you expanded rights to avoid a repossession, but it does not prevent it forever. If you are claiming poverty yet trying to hold onto a luxury car, your bankruptcy judge will likely force you to give up the vehicle. If it is basic transportation that you need to get to your workplace, then you may have certain rights under bankruptcy to keep the vehicle and make payments through a court-appointed trustee.

If you believe that your financial situation may warrant a bankruptcy filing, then you should obtain competent legal counsel to provide advice on your situation.

Can you Get your Repossessed Vehicle Returned?

Following a repossession, you may absolutely retain rights to retrieve your vehicle. You have a limited amount of time to make arrangements with the lender to submit a lump sum payment that will satisfy the loan balance in full. Expect to pay late fees, attorneys fees, repossession fees, storage fees and even auction costs. These could easily add between $1,000 to $2,000 onto your loan balance.

You may use funds from a family loan to pay off the vehicle loan and receive your vehicle. Perhaps you have some money in savings or are able to sell other property to come up with the money.

If you are exceptionally fortunate, you may be able to obtain a loan from another lender to pay off the existing loan. This is extremely unlikely though, since your repossession will probably already be reported to the credit bureaus.

In some very limited circumstances, you may be able to convince your lender to return your vehicle and continue making payments towards the loan. This is quite rare, since a repossession is usually a last option for a lender. Still, you might be able to find a way to accomplish it depending on equity, the value of the vehicle, condition of the vehicle or amount of cash that you may be able to bring to the table.

Can your Lender Sell your Vehicle?

Following a repossession, your lender does have the right to sell your vehicle. This can be done on site. Some community banks will allow customers to submit bids on repossessed vehicles for purchase.

Most often, a lender will sell the vehicle at auction. Car auctions are attended primarily by dealers who purchase the vehicles for wholesale.

Regardless of the method of sale, your vehicle will likely be sold for substantially less than fair market value. As a result, you will owe any deficient balance on the loan, which could be substantial following all of the fees.

You have the right to purchase your vehicle from the lender prior to sale. The sale price would be the exact amount of your loan balance, which by this point is far more than you owed just a couple of months ago.

You may also take your chances and try to buy your car back at auction. This is not recommended, since you would still owe the difference on your existing loan. Of course, there is still the problem of coming up with the full amount of what is owed.

Your repossession rights will vary depending on which state you currently live in.