My Bank Is Threatening To Repossess My Car. Can My Bank Do That?

When you fall behind on your car loan payments, the lender will threaten to repossess your car. If you have an auto loan with the bank, the bank can repossess the vehicle. The bank can sell the car and apply the money to the loan balance. You may still owe money on your car after the bank repossesses the vehicle.

You can negotiate a payment plan to avoid repossession. For more information about how to stop your car from getting repossessed, contact a local consumer protection lawyer.

Understanding Vehicle Repossession

In vehicle repossession, the lender can take back the vehicle if the borrower doesn’t make timely payments. The lender uses their security interest in the vehicle to legally take back possession.

Repossession generally happens with vehicle loans or leases. With a loan, the bank lends money to purchase the car but keeps a lien on the vehicle. With a lease, you get possession of the vehicle for a limited period, sometimes with a right to purchase at the end of the lease. However, the dealership maintains ownership rights. It can take the car back if you don’t keep up with payments.

The lender or leaseholder can take back the car without a court order; they’re the legal owner. They don’t have to tell you they’re taking the repossessed vehicle. You may park your car outside your home, and a repo agent can take the car without telling you.

Legal Grounds for Repossessing a Vehicle

When you get a vehicle loan, the lender keeps the vehicle title. They are still the vehicle’s legal owner, even if you’re driving it around. To keep the vehicle, you must follow the car payment terms on the loan agreement. If you’re late on payments or stop making payments, you are in default. The creditor can ask for the full amount of the remaining loan or repossess the car.

The loan agreement may also require you to keep auto insurance on the vehicle. You could breach the loan agreement if you don’t keep up with your auto insurance payment or the insurance company drops you after an accident. Then, the repossession agent could take the car because you didn’t maintain insurance.

The Repossession Process

The repossession process can depend on the lender and state law. Some states give borrowers a right to cure. The lender must give the borrower notice to make payments current, or they will repossess the vehicle. Most states, however, don’t require notice before repossession. The laws can vary significantly between jurisdictions, so consult with a local lawyer to learn the ins and outs.

Banks and lenders generally work with repossession agencies or towing services. Repo agents charge the lenders a fee to get the vehicle back. They give the repo agent information about the borrower and the vehicle. This includes the borrower’s address and phone number. They may have extra keys to take the car, or they may use a tow truck. They could even take possession by hotwiring a vehicle.

After repossession, you may still owe money on the used car. Depending on the lender, the bank may sell your car to a dealership or at a public auction. They’ll apply the sales proceeds to the unpaid loan. If there is money left over, they can send you the surplus. If the sale doesn’t cover the loan balance, the bank will try to collect the remaining deficiency.

Your Rights During Repossession

The repo agent has the legal right to take the car if you miss payments. But this doesn’t give them the right to do anything they want to take back the car. Repo agents can’t breach the peace to get your car back, including:

• Making threats
• Using physical force against you
• Threatening your family
• Taking the vehicle from a closed garage without permission

After repossession, most states require the agency to send you a notice of seizure. They must also make an inventory of all your personal belongings in the vehicle and send you a notice. You can recover your personal property, but the repo agency may charge storage fees to get your property back.

You have consumer protection rights in the repossession process. If the repo agent made illegal threats, caused injury, or doesn’t return your property, you can take legal action. You can report complaints to your state agency that licenses repossession agencies and law enforcement. You can also file a lawsuit in small claims court against the repo agent to get your property back.

Ways To Avoid Repossession

In most states, you have a right to get the vehicle back within a limited time if you pay the full amount owed, including:

• Past due payments
• Remaining debt
• Late fees
• Repossession fees
• Storage and towing fees

If the lender sells it at an auction, you can try to bid for the vehicle. You may be able to get the car back for less than you owe. However, you will still be responsible for the deficiency balance.

If you’re behind on payments and don’t need the vehicle, you can return it to the lender or dealership before repossession. You can avoid the additional fees for the repo agent, towing, and storage. You can try to negotiate with the lender to settle the debt through voluntary repossession.

How a Lawyer Can Help

Lenders don’t always follow the rules, and banks can make mistakes. Administrative or bookkeeping errors can lead to repossession even if you’re making your payments on time. If the bank took your car when you weren’t in default, you can take legal action to get your vehicle back. Contact a local consumer protection lawyer for legal advice about bank repossessions.