What is repossession?
Repossession occurs when property is taken by someone that has an interest in the property. The property is often a vehicle, and the person that takes the property is typically a repossession agent that is sent by the company you financed your loan with.
Why is this happening? Why is my car being repossessed?
Sometimes it is a mistake where they fail to see you made a payment; other times, people fall behind on payments. There are lots of reasons for people falling behind on car payments, including loss of job, unexpected medical expense, and bank made a mistake and didn’t withdraw money.
How does the repossession process work?
If the repossession takes place, you are likely to owe MUCH MORE money that you would have owed had you stopped the repo man from taking the car. Why? Because the finance company will likely sell your car for less than its fair market value.
Then, the finance company will come after you for the amount you still owe, plus interest. For example, you owe $20K on your car. Your car is worth $20K.
You tell the repo man “NO, you cannot take my car.” They leave and do not repossess. You still owe the $20K, but you have a car and a means of transportation. You can catch up on payments, sell the car and pay off what you owe, or negotiate a payment agreement with the finance company.
The repo man takes your car. You now owe for the cost of the repossession, likely a few hundred dollars. Then, the company sells your car, but only for $10K, which they take off the $20K. Now you owe $10K even though you don’t have any car to show for it. Then they sue you for the $10K plus title fees, storage fees, repossession costs, AND ATTORNEY’S FEES. You can defend this, but the stakes go up because you could be responsible for the other side’s attorney’s fees.
Is there anything I can do?
Yes, lots. Your car cannot be repossessed under lots of circumstances:
- YOU TELL THEM NO! The repo man CANNOT take your vehicle UNLESS:
- He has a court order (they rarely have that; make them show you);
- or He can do so WITHOUT “breach of the peace”.
- You have not “breached” the agreement. This means you have not violated the terms of the contract. The most common reason for repossession is being behind on payments. If you are NOT behind on payments, your car will typically not be repossessed.
- Negotiate a Settlement. Often times people cannot pay because the car they purchased was defective, leaving them without a reliable means of transportation to get to work. Under the FTC Holder Rule, a dealer’s fraudulent conduct or conduct of misrepresenting things in a sale with credit involved may provide a defense to the consumer, including the dealer’s attempts to get money. This applies also to any company that purchases the contract from the dealer.
You may want to hire an attorney who knows what he or she is doing. Whether defending yourself in a lawsuit or suing the company that wronged you, the laws are rarely as simple as telling your story. Often the biggest mistake you could make is failing to respond to a lawsuit because then the Court may enter judgment by default against you.