Car

Life Without Wheels

One of the unfortunate byproducts of economic downturns is the effect on the average consumer.  Because we live in a society that is driven by credit, these economic challenges make it increasingly difficult to make monthly payments on many of the items we have grown accustomed to financing.  A regrettable end result of missed payments on your primary mode of transportation, for example, is car repossession.

When you sign the paperwork to purchase or lease a vehicle, you are making a commitment to a creditor.  The contract, per repossession laws, assigns certain rights to creditors – rights that are in place until your vehicle is paid in full.  Each contract can vary as to the details, but in most cases if you miss a specified amount of payments, your creditor can take away your car without advanced notice.  Always try to avoid this by contacting your lender to explain your financial situation and negotiate other temporary arrangements if possible.

In many states, the creditor can seize your vehicle upon missing a single payment.  The rights to seize your car are often assigned to a third party that is paid for their efforts upon completion of the task.  Most creditors prefer to avoid car repossession and will employ other strategies to getting you to bring your payments current before resorting to this process. 

If your car should be seized, the law requires that it be done in a peaceful manner.  If a “breach of the peace” is committed by your creditor or whomever he has assigned to the task of repossession, he could ultimately be penalized for this action.  The breach includes physical force or the threat there of or the removal or your vehicle from a closed structure without having received your permission.

Assuming the creditor is successful with the vehicle repossession, he has the option to sell it at public auctions.  If the auction does result, the creditor, in many states, must notify you as to the time and place of the auction. 

If you want to reclaim the car, you have until the time of the auction to bring all payments current.  If a sale to a third party occurs at the auction, then you will owe the creditor the difference between the sale price and the amount of the balance of the loan plus any other administrative and repossession costs that the creditor incurred during the process.  Remember, regardless of the auto repossession, all personal belongings in the car are to be returned to you without hesitation.

Try to avoid this mess if at all possible.  Economic bumps in the road happen to everybody.  Most creditors don’t want to engage in car repossession – it is almost always a lose/lose proposition.  Understanding the process just may be what helps you avoid it.