When you purchase a vehicle on credit, you will have to make complete payment to your creditor before you can gain full rights to the vehicle. Your rights to the vehicle are established the moment you sign the contract, and these rights depend on the laws of your particular state. If you fail to make payment on time, your creditor may take back your vehicle. This is called vehicle repossession.
However, vehicle repossession restrictions vary from state to state. If the creditor violates the rules of the state, he may have to pay damages to you or even lose all rights to your vehicle. So, it is suggested that you contact your personal attorney to get legal advice or the consumer protection agency of your state to find out more about your vehicular rights.
In several states in the US, it is legal for the creditor to repossess your vehicle without giving you prior warning. If you are a defaulter, most of the states will allow the creditor to repossess you vehicle without prior warning, and they can even enter your property to seize your vehicle. However, almost all states have a ‘breach of peace’ rule, which makes it illegal for the creditor to use physical force or threat to repossess your vehicle. Furthermore, in certain states, it is illegal for the creditor to enter your garage without your permission.
After your vehicle is repossessed, the creditor may keep it to compensate your debt. He may also resell your vehicle in a private or public sale. In some states, it is mandatory for the creditor to inform you about the status of the vehicle. If your vehicle is auctioned off, the creditor needs to let you know the date and time of the auction. At any time, however, you can ‘redeem’ your vehicle by paying up the remaining amount, as well as other expenses such as storage and personal injury attorney fees.
When the creditor resells your car, the money he gets can either be equal to the amount you owe him, or it can be less or more. If it is less than the amount you owe him, then the resold vehicle is said to be in ‘deficiency’. In such a scenario, most states allow the creditor to file a case against you for ‘deficiency judgement’. As a result, he will have the right to get the balance of the loan from you.
If you feel that you will not be able to make payment to the creditor on time, informing your creditor or lessor beforehand will reduce the chances of vehicle repossession. You should also make an attempt to negotiate with your creditor to delay the date of your payment. And if possible, try to revise the payment schedule in your original contract.
For more information on vehicle repossession, you can contact the Attorney General of your state. You can also try to contact your local consumer protection agency. There are also credit counseling organizations that can help you solve your vehicle repossession problem.
Vehicle repossession is not an uncommon thing in the US. In the year 2008, there were more than 1.6 million repossession cases in the country. Although there are measures that can be taken to get your vehicle back after repossession, the best thing to do is still to make your loan payments on time.