Generally speaking, repossessions should be dealt with in a similar manner to any other item on your credit report. You have to look for one of two things:
- Problems with the reporting, or
- Problems with the repossession process itself.
In this article we’re going to focus mainly on point #2: problems with the process itself.
As you may be well aware, there are many aspects of the credit system that are tricky and error prone. There are also many companies that are sloppy and careless, and even worse there are companies who use unethical and illegal methods and tactics in the regular course of business.
So dealing with a repossession often involves diving into state laws, as well as the paperwork and processes involved in the repossession, and looking for problems related to sloppy, careless, unethical, or illegal actions on the part of the companies and individuals involved that could neutralize the repossession.
Here are some key points to consider when reviewing the many details of a repossession:
1. Did the company who repossessed the vehicle have a license to do so? You can get a copy of the police report that was filed after your vehicle was seized and check. If they didn’t, they could be in legal trouble and this could be used as leverage to get the repossession removed.
2. Depending on the laws in your state, the lien holder is probably required to send you certain notices prior to selling the car at auction, and possibly even notices about their intention to seize the property. If they have failed to send these notices, this could be used to your advantage.
3. Many times, the credit reporting associated with the repossession will be inaccurate. Always review the repossession documents and your own records, and compare everything to make sure it all matches up. It many cases it won’t, and this can be beneficial to your efforts.
4. The remaining balance that the lender calculates after the sale of the property at auction may not be correct or make sense. Make sure you check and double check all the numbers to make sure things add up.
5. The remaining balance is often referred to a collection agency. You should follow procedures for dealing with a collection on your credit report, and remember that you could still end up with a judgment on your credit report if you aren’t careful. Also remember that any serious problems with the repossession process could mean the debt is legally uncollectable.
6. Don’t forget to check the dates: dates on letters and notices; dates on forms and legal paperwork; dates on which events are claimed to have happened. These dates have a strange habit of getting tweaked here and there in the creditor’s, collector’s, and/or repossession company’s favor.
7. It is best to do everything in writing when dealing with the repossession company, the creditor, or the collector (or anyone else tied to the repossession).
8. If you must talk to people on the phone regarding your repossession, you should record the call if possible (check the laws in your state on recording phone calls first!) Legal violations are common, especially on the phone, and if and when they happen, you will want to have a record of them.
9. Keep track of every single violation or potential violation that takes place with regards to the collection of the remaining balance. At $1000 a piece, these can whittle down the balance owed rather quickly!
10. Throughout the entire process, ask questions and investigate every claim. Don’t just take their word for it!
11. Remember that complex legal situations are usually better if NOT handled on your own. Always seek the help and advice of an attorney regarding situations that could have serious legal and financial consequences. State laws on repossessions will vary, so it is important to talk to an attorney in your own state who is familiar with laws affecting repossessions.
The bottom line with a repossession is that it’s a complex process with a lot of paperwork and red tape. It is highly likely that somewhere in the process, something has gone wrong… and that “something” could be the key you need to removing the repossession and any associated collection from your credit report, and settling (or even wiping out) any remaining debts.
Know Your Repossession Rights
Q: If I fail to make my car payments, how quickly can the creditor repossess my car?
A: Most agreements will specify that a “default” occurs as soon as the payment is late, although the contract may give you a grace period to make up your payments.
Q: Must the creditor take me to court before repossessing my car?
A: Not always. Secured creditors can repossess (or have a “repo man” repossess) your car without a court order as long as there is no “breach of the peace.”
The creditor may also decide to file a lawsuit to repossess your car. In those cases (called “replevin” cases) the creditor can get a court order allowing the creditor to repossess your car through legal proceedings (e.g., the sheriff’s office). The court may order the repossession very quickly and sometimes even before you know that a case was filed. You must follow the court’s “replevin” order even if you had no advance warning about the case. To challenge the replevin order, you must file a hearing request with the court within five days of the date you receive the paperwork. You will also have to file an answer within 28 days. You shuold keep all correspondence and contact an attorney immediately for legal assistance.
Q: Is there anything the creditor cannot do during the repossession?
A: The creditor cannot do something outside of court that is “likely to produce violence” or “reasonably tends to provoke or excite others to break the peace.” If the creditor “breaches the peace” in such a way, you can ask the creditor to leave and stop trying to repossess your car. If the creditor refuses, you should contact the police, explain the situation, and ask for an officer to come out to “keep the peace.” You must not, however, use or threaten to use force to stop the repossession.
Q: Must the creditor tell me that my car will be repossessed?
A: Generally, no, unless your contract requires it.
Q: What can I do to keep my car if I am behind in my payments?
A: If you cannot become current in your payments or make another arrangement with your creditor, you may be able to prevent the repossession by filing bankruptcy.
Q: What happens after the repossession?
A: Within five business days after the repossession, the creditor usually will send you at least two “default” notices explaining why your car was repossessed and what you must do to get it back. In order to get the car back, you can be required to pay the past due amount along with the costs of the repossession (up to $25) and a deposit of up to two of your car payments.
If you cannot pay to get the car back, you will be notified that the car will be sold. This notice usually is sent at least 10 days before the sale and can be combined with the default notice described above. You must keep all notices sent to you because any errors in the notices may give you a defense if you are sued for the balance due on the loan.
In most cases, the creditor will try to sell the car and apply the money from the sale to the balance you owed on the loan and any repossession expenses. If the car’s sale price does not fully cover the money owed, you still may be sued for the balance due.
Q: If I voluntarily return my car to the creditor am I still responsible for anything I still owe on the loan?
A: Generally, yes, unless the creditor agrees not to hold you responsible. Such an agreement should be put in writing and signed before you return the car.
If you have questions about your legal rights or duties, you should contact an attorney. Send us an email and we will point you in the right direction if you cannot afford a lawyer