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|My Car Was Repossessed||
Last updated: December 2009
If you took out a loan to buy a car, or if you lease a car, the person who gave you the loan, the creditor, has a right to take the car if you do not make a payment or default on the loan. When the creditor takes back the car because of a failure to pay, this is called, repossession. Your creditor or lesser can legally repossess or take your car as soon as you default on your loan or lease if your car is listed as collateral in your contract. After repossessing your car, the creditor must send you a Notice of Redemption and an Affidavit of Defense.The Notice of Redemption tells you whether the creditor will keep or sell your car. It also tells you that you have a right to buy back your car. Click on words that appear like 'this' to learn what these words mean.When can a car be repossessed? If you needed a loan to buy a car, then you agreed to make payments on the loan in the future. The car is used as collateral for the loan. The same is true if you lease a car. Until the loan or lease is fully paid, the person who gave you the loan, the creditor, has a right to take the car if you do not make a payment or default on the loan. When the creditor takes back the car because of a failure to pay, this is called, repossession.Your creditor or lesser can legally repossess or take your car as soon as you default on your loan or lease if your car is listed as collateral in your contract. Repossession can happen even if you only miss one payment.What will happen to my car after repossession? After repossessing your car, the creditor must send you a Notice of Redemption and an Affidavit of Defense.The Notice of Redemption tells you whether the creditor will keep or sell your car. It also tells you that you have a right to buy back your car. The Notice of Redemption must include the following details:Your nameYour car's description, including the year, make, model, and vehicle identification number (VIN)A statement that the car was repossessed on a certain date for not making payments on the loan (or other reason)Your right to redeem the vehicle and the name, address, and telephone number of the creditor where you can get information about the amount due to buy back your carYour right to have an itemized statement of the unpaid debtThe creditor's intent to sell or keep the car after 21 days from the time you get the noticeAdditionally, the Affidavit of Defense will let you explain why you did not make payments on the car. Mailing the affidavit within 21 days will stop the creditor from selling your car. But, you will need to go to court to explain why you did not make payments if you choose to claim a defense. You may want to meet with a lawyer to decide if you have a defense.How can I buy back my car? There are two ways to buy your car back after it has been repossessed.1) If you have paid more than 30% of the total sale price of the car, you can get your car back if you do the following within 21 days:• Pay all the back payments owed so you are current on the contract• Pay any late charges• Pay the costs of repossession, like towingYour creditor must give you a written notice, informing you of these rights, within 3 days of the repossession. You can only get your car back in this way once during the contract.2) If you did not pay 30%, the creditor may require you to pay off the entire loan plus repossession and storage charges to get the car back.Was my car's repossession against the law? Sometimes repossession can be against the law. The creditor or repossession agent, often called the "repo man," must follow proper guidelines when taking your car. Below are some examples of unlawful repossession:The car was not collateral for the loan. The creditor can repossess your car only it was listed as collateral for the loan or lease. Read the details of your contract to find out if your car was used as collateral. The contract must list the car and you as the owner to repossess properly.The "repo" agent breached the peace. This means that the repo man cannot take your car if you object in person at the time of repo. The repo man cannot use violence or threats and cannot break into a locked garage or destroy your personal property to take the car.You were not in default at the time of repossession. You may not be in default if the creditor regularly accepted your late payments without objection. The creditor must give you fair warning that payments must be made on time before the car can be repossessed for late payment.The notice of redemption was insufficient. You have the right to buy your car back after repossession. Sometimes repossession is unlawful if the creditor fails to give you enough notice. For example, the creditor must give you at least 21 days to buy back, or "redeem," your car after repossession.The police helped repossess your car. Unless there is a court order, the police may never assist creditors or agents in taking your car.You should speak with a lawyer if you believe that the creditor broke the law when taking your car.You can also write the reason why you were late in paying your car payments on the "Affidavit of Defense," sent to you with the "Notice of Redemption." Send the affidavit by certified mail to the creditor within 21 days after you receive the Notice.If you mail the affidavit, there will be a court hearing about the late payments. You should talk with a lawyer if you think you have a valid reason for not making the payment.Will my car be sold after repossession? Maybe. Before reselling the car, the creditor must give you the chance to mail in the "Affidavit of Defense," which triggers a court hearing. If no affidavit is submitted after 21 days, the creditor may sell the car to pay off the loan.The creditor must send you a notice that they intend to sell the car. The notice must include the following:For a public sale, such as an auction, the notice must include the time, date and place of the sale;For a private sale, the notice must state the date after which the sale will be held;It must tell you about your redemption rights;It must give enough time to redeem or to find other buyers before the resale;It must be given not only to you but also to cosigners and guarantors;It must be correctly addressed;It must be clearly written; andA debtor must be sent a new notice if the sale gets rescheduled. If the notice states the wrong information, such as wrong date or sale location, the notice is no good. If the creditor learns that the debtor did not receive the notice and takes no steps to correct it, the notice is no good.If the creditor decides to sell the car, it must be resold in a "commercially reasonable manner." In other words, the place, time, and money accepted for the car must all be "reasonable."There are no laws that say what is commercially reasonable. However, there are some rules that guide what is commercially reasonable. Below are some examples of unreasonable practices:Keeping you from going to a public sale of your carHolding a public sale late at night or in bad weatherCancelling or rescheduling a sale and not letting you knowNot preparing or reconditioning the car to get the best price at saleOnly accepting one bid or offer for the carNot taking care to preserve the car after repossession and before the saleIf you believe that your car was sold unreasonably, you may bring a lawsuit in small claims court. You should speak with a lawyer if you believe your car was sold unreasonably.Can the creditor keep the car instead of selling it after repossession? Yes. The creditor may decide to keep the car to satisfy your debt instead of selling it. If the creditor decides to keep the car, a written notice must be sent to you.Do I still owe money to the creditor if my car was repossessed? Even though your car was sold, you may still owe money to your creditor. In most cases, selling your car doesn’t cover the loan. The creditor may try to collect the difference from you. If you owe the creditor $3,000 and the car was sold for $2,000, the creditor may try to collect the remaining balance of $1,000 from you. In rare cases, a car is sold for a value higher than the money owed to the creditor. The money left over from the car's sale is a surplus. You have the right to collect the surplus.If you do owe money and your income and assets are below a certain amount, the creditor might not be able to collect anything from you. To learn more, see the "Related Articles” section of this Guide.I haven't received details about my car's resale. How do I get a copy? If you don't get a notice, you can request the details of the sale within 1 year. You can send a written request to the creditor whose name and address is listed on the "Notice of Redemption." The lender has 14 days to send you the details. The explanation must have the following information:The amount for which your car was soldThe expenses related to repossessionThe amount you owe (deficiency) or is owed to you (surplus)Any other credits or expensesI co-signed on a car, but the owner didn't pay the loan. Do I have to make back payments? Yes. As a co-signer, you are responsible for late payments on the loan or lease. Once the car is repossessed, the creditor will send you a notice that explains how you can get the car back. In order to get the car back, you must pay the balance you owe. Can I get back any items I left in my car? Yes. If you want to get your items that you left in your car back, write a list of the items down and send it to the creditor and to the company.You need to fill out and mail to the creditor a “Request for Return of Personal Property Left inside Repossessed Car,” which you can find in the "Forms/Letters" section of this Guide.If the creditor doesn’t give you your items back, talk to an attorney. You may be able to sue for the value of the items in small claims court.If I replaced something in the car, like the stereo, can I get it back? Probably not. You may not get certain items, such as a stereo or hubcaps. You may only get items back that can be removed from the car without decreasing its value.If you know your car is going to be repossessed, put the original parts back in the car. You can't take these types of parts out without replacing them with the original equipment.
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