If you’re going through financial hardship or a difficult life event, it can be challenging to keep up with your car loan payments. Your vehicle is collateral, or your pledge to a lender that you'll repay the loan. If you default on the terms of your loan agreement, the lender may choose to repossess your vehicle. They're not required to contact you before the repossession.
If your car was recently repossessed, you may be wondering what happens next. Do you still owe the payments that you missed on your loan? Do you still owe the full balance after your car is sold?
What happens after a repossession?
After your vehicle is repossessed, the lender will typically send a Repossession Notice or Notice of Intent to Sell Property. This letter confirms that your vehicle was repossessed and tells you how to get the vehicle back. It also tells you when and where your vehicle will be sold or auctioned.
Once the vehicle has been sold, the lender will send a Deficiency Notice. This letter will indicate the total balance that you still owe in order to satisfy the loan. It will itemize the sale price of your vehicle along with any additional charges, such as a repossession fee and storage charges. You’re required to pay this outstanding balance under the terms of your loan agreement.
This article from Nolo details the options that are available to you if you owe a deficiency after a repossession.
What if the repossession was handled illegally?
Repossession agents have to follow clear laws when they repossess a vehicle. For example, they’re not allowed to harass you, threaten or touch you, or refuse to leave your property, among other laws.
If the repossession agent didn’t follow the law, you may be able to take legal action against the repo agent and the creditor at no cost. Contact us for a free evaluation of your case.
What role do the police have during a repossession?
The local police are often contacted during a repossession. Whether the consumer or the repo agent requested that the police come to the scene, the police are there to help keep the peace. They should assist in diffusing any confrontations between the consumer and the repo agent.
If the police threaten you with arrest or insist that you turn over the vehicle to the repo agent, they may have crossed the line from keeping the peace to breaching the peace. This may be a violation of your constitutional rights. You may be entitled to bring a lawsuit against the police department, the repossession company, and the lender.
To evaluate whether your consumer rights were violated, seek legal help from a qualified consumer protection attorney.