When you apply for a new loan and borrow money to buy a car, you give the creditor a security agreement in return. Most likely, you will be asked to sign a contract that you agree to use the car as collateral for an auto loan. This means that the lender can repossess the car without notice in case you stop making loan payments on time. In this situation, the best thing to do is to negotiate with your lender to avoid repossession. In a vehicle repossession process, the bank or leasing company can take away your vehicle if you are behind your loan payments. The lender will sell your car and use the money to pay off some or all your outstanding debts.
Since car repossession laws differ from state to state, a competent Phoenix bankruptcy attorney can help you understand the state laws that apply to your case. Generally, creditors can seize a car using “self-help” repossession. This means that the lender can take your car back without needing to sue you or file a lawsuit in bankruptcy court. Instead, he or she will hire a repossession agent or company to take back your vehicle.
Lenders might have the right to reclaim your vehicle, but you also have legal rights against their unlawful and unreasonable actions. They can repossess a car that is parked on private property, but state laws strictly prohibit them from “breaching the peace” while doing so.
Repossession agents and companies are obligated to abide by the rules in taking your car. They are not allowed to breach the peace to threaten you, hurt you or use violence, damage personal property, or break into a locked garage. Moreover, they cannot take a car that is not used as collateral for car loans.
Even if you were not able to make payments on time, the lender cannot repossess your car unless you are in default. For instance, the lender repossessed your car because you were two weeks overdue of your car loan. However, it says in your payment plan contract that you are given a grace period of two weeks for late payment and you are not in default unless you failed to pay back within 30 days. In this case, the car should not be seized because you are not yet in default.
If the lender wrongfully repossessed your car, you may be entitled to damages and use it to defend against a deficiency lawsuit. You may seek legal help from a qualified Phoenix bankruptcy lawyer to help you through the legal process.
If you lose your truck, van, car, or other vehicles, you have the right to repossess it. You have several options to get it back depending on the state law and the provisions written on your loan contract. You may choose between the redemption of the vehicle or reinstatement of the loan. You can “redeem” the vehicle when you repay the unpaid loan balance in full, including collection costs, late fees, and repossession charges (towing charges, repair fees, and storage costs). After the redemption, the repossessed car will be returned to you by the lender.
An alternative option is to “reinstate” the loan as you catch up by paying back the past-due loan amounts, including costs of repossession and late payment charges. After reinstating the loan, the lender will give the car back to you, but you need to continue making monthly payments according to the terms and conditions of the repayment plan contract.
After the repossession, the creditor will send you a letter to inform you about your right to redeem or reinstate. In case you did not receive any letter, do not hesitate to contact your creditor to ask about the process of redemption and reinstatement. You can also request a breakdown of the amount you owe and the method of loan payment.
Another way to retrieve a repossessed car is to bid on your vehicle and buy it back when the lender decides to sell the car at a private sale or public auction. However, even if you get your car back, you will still be responsible for making payments for the remaining deficiency balance.
Taking back repossessed cars can be a complicated process, but it is not impossible. You have the right to know the different options that you can choose from depending on your present financial situation. In case your car was illegally repossessed by the lender, you need to fight for your rights by filing a lawsuit in court. For legal help to reclaim your repossessed car, do not hesitate to contact us at Phoenix Fresh Start Bankruptcy to schedule a consultation with our experienced Phoenix bankruptcy lawyers.