Automobile Repossessions- How To Get Your Car Back
Typically, when you purchase a new vehicle you take out a loan to pay for part or all of it. At that time, you signed an agreement with the lender to get a loan which holds you legally accountable for making monthly payments on the vehicle. If you miss a payment the lender who gave you the loan has the right to repossess your car. A missed payment is one that is more than 30 days late. It takes time, money, and effort to repossess a car. So, although the lender has the right to repossess the car after only 30 days, they typically won’t repossess it after missing just one payment. Most lenders will proceed with repossession after a borrower misses two or three consecutive payments. And these lenders move forward with repossession if they haven’t heard from the borrower. Lenders do not want to spend a lot of time trying to contact the borrower. So, if you have missed a payment make sure you are talking to the lender. You do have options to get your car, van, truck, or other vehicle back after it has been repossessed. Which option is best for you depend on how much money you have, your state’s laws, your loan agreement, and the lender’s willingness to work with you.
Redemption
The most sure fire way to get the car back is to pay off the loan. This is called exercising your right of redemption. To redeem the loan, you must pay back the entire balance of the loan as well as certain fees and costs, such as repossession and storage fees. You can redeem the car at any time prior to the private sale or auction. The bank is supposed to send you written notice that contains the information you need to redeem. If you haven’t received that notice within five days of the repossession, contact the creditor right away to get the payoff amount and instructions for redemption. Your right of redemption ends when the car is sold.
Reinstatement (If Applicable)
If you don’t have enough money to redeem, then another possible option is to reinstate the loan. With reinstatement you bring the loan current by making up all of the past due payments, including applicable fees and late charges, in one lump sum. The right of reinstatement is only allowed in some (not all) states, or by the terms of your loan agreement. If you can and are able to reinstate, you should act quickly. Usually, you are allowed only a very short time after the repossession (sometimes 15 days) to reinstate the loan. If your right of reinstatement is based on the loan agreement, then the time period might be more or less, depending on what the agreement says.
Buy the Vehicle Back at the Auction
If the car is going to be sold at public auction (the bank is supposed to give you notice if it is), then you can attend the auction and bid on it yourself.
Talk to the Bank
If none of the above options are doable for you, don’t rule out trying to negotiate an alternative arrangement with the creditor. For instance, if you owed three payments but only have enough funds to pay for two, you could negotiate a partial reinstatement and pay the rest of the past due payments later. You could also try to work out a new payment plan or even refinance the car loan. Talk to the bank and find out what it would agree to. Of course, all of these options are more feasible if you try to negotiate them before your car is repossessed. If you have reason to believe that the bank violated your rights during the repossession, such as breaching the peace, you could use this as bargaining leverage to get the car back.
How To Get Your Repossessed Car Back
The car repossession process can be both scary and emotionally overwhelming. Here’s what you need to do to face your situation head-on.
Speak With Your Lender
Don’t hide from the problem. Contact your lender immediately and determine why your car was repossessed. There may be a different explanation than missing your payments. Cars can be repossessed for not having adequate insurance or because of an administrative error on their end. A quick phone call can give you clarity on the situation and provide you with options to resolve the issue.
Evaluate Your Finances
If you missed payments, you’ll need to review your finances before jumping through hoops to get your car back. Look at your budget and decide whether you can realistically afford to continue carrying a car payment and other car expenses, like gas and insurance.
Know Your Rights
You may be in an emotional state after having your car repossessed, but it’s important you remember that you still have rights in this difficult time. Here are some examples of common issues you may run into during the car repossession process.
• Repo workers have limitations: They may be able to come on your property to repo your car, but they can’t cause any type of damage in the process.
• Lenders must return your property: If you had any personal belongings in your car, your lender is required to return it to you. Although they can sell the car, they can’t sell your possessions. If you think your rights may have been violated, contact a lawyer and your lender immediately.
Discuss Your Options
You have a few paths to choose from once your car has been repossessed.
• Pay off your loan. The most straightforward way to get your car back is to pay off the loan in full. While this may not be an option for most, consider asking a friend or family member for help paying off your balance. Then make a clear arrangement to pay them back over time.
• Agree on a payment plan. Your lender may be willing to set up a new payment plan if you can catch up on your missed payments and prove that you can meet your monthly obligation going forward.
• Let the car go. Sometimes it’s best to just walk away if your finances are already strained. Lenders send repossessed cars to auction to help cover part of the cost. Keep in mind you may still owe your lender additional money after it is sold. For example, let’s say your lender was able to sell your car at auction for $10,000, but your loan balance is $15,000. You’ll still be on the hook for coming up with the remaining $5,000.
• File bankruptcy before the car goes to auction. Although this isn’t recommended, you can file for bankruptcy which will temporarily prevent the sale of your car. This can give you time to find the money to pay off your loan.
Moving On After Your Car Gets Repossessed
Having your car repossessed is a traumatic experience, but you need to treat it as a learning experience and begin improving your finances. Start by determining how you can cut expenses in all areas of your life, including auto-related expenses. Driving a fancy, expensive car isn’t worth tanking your finances. Opt for a less expensive car or an alternative method of transportation like carpooling to work and taking public transportation.
Your credit will likely take a significant hit too. Your delinquent loan may be sent to collections that can stay on your credit report for seven years. It’s important you take steps to repair the damage. Pay your remaining bills on-time consistently and only begin taking on new lines of credit when you can safely afford them. If you’re struggling to pay other bills, you need to reach out for help immediately. Talk with your creditors to set up alternative payment plans and figure out ways to bring boost your income through a side gig or by changing jobs.
Stopping a Vehicle Repossession
While your lender may not be required to notify you that repossession is coming, you’re still likely to get some form of communication from them once you’re 30/60/90 days late on a payment. It may be hard to believe, but your lender likely doesn’t want to go through with the repossession process, either. For them, it’s a costly and time-consuming process, and they’d rather have you actively paying on the loan. Some lenders offer deferment programs for borrowers in tough financial times. This involves getting one or more payments paused and then typically added to the back-end of your loan. Occasionally, lenders may be willing to work in other ways as well. Some may adjust the terms of your loan, or move the payment due date to something more convenient to your pay schedule. Another route to explore is refinancing. Refinancing is when you replace your current auto loan with another one on the same vehicle. Most borrowers refinance to get a lower monthly payment by either extending the loan term or lowering the interest rate. If you qualify for refinancing and manage to score a lower monthly payment, it could help you avoid a repo. If you think you’re on the path to repossession, the quicker you act, the more likely you are to find a solution. If you can’t avoid repossession, then hope still isn’t lost. After a car is repossessed, you’re likely to receive documentation from your lender on the steps to take to get your car back.
When creditors repossess your car, they usually tell you how much you must pay to get the vehicle back. This is usually the amount by which you fell behind, plus any fees they tack on as a result. If you do nothing, the car will be auctioned off. If they get less for the car than you owe on the loan, you’ll be presented with a vehicle loan deficiency—in other words, a bill for the remaining balance.
Chapter 13 Bankruptcy
If your car has been repossessed and you want to get it back, you can file for Chapter 13 bankruptcy. This is often not worth the cost of the Chapter 13, though a Chapter 13 may be very worthwhile if the default involves your home. Note that this type of bankruptcy allows you to keep some of your assets, such as your home and car. However, in either case, you will repay your creditors over the next five years through an agreed-upon payment plan. If you fall behind on those payments, your bankruptcy claim can be dismissed, and your assets repossessed.
Chapter 7 Bankruptcy
If your car has been repossessed, and you don’t want to keep it, filing for Chapter 7 bankruptcy will eliminate the need to pay the vehicle loan deficiency. If you qualify for Chapter 7 bankruptcy, you may be required to sell some of your assets, but you will typically be permitted to keep most of those assets. Any proceeds are used to repay your creditors even if you can’t raise the full amount and your debts are permanently discharged. In short, it may be possible to get your repossessed vehicle back by filing for bankruptcy. However, it’s important that you talk to an attorney first. Bankruptcy can wipe the slate clean and give you a chance for a fresh start, but each type comes with its own special rules and obligations. You need to understand what you’re agreeing to before you can make the right decision for your situation.
How Long Does a Repossessions Stay on Your Credit?
Repossession charges stay on your record for 7 years. That is a long time for something to stay on your record. Even though the effects of the repossession charges will lessen over time, it will still have an effect on your credit throughout the 7 years. Having something this big on your credit report will make it extremely difficult for you to get loans in the future.
How Can I Deal with an Old Repossession?
Luckily, there is an option that can not only help lower the amount of money still owed on the repossession, but it also can get the repossession charges taken off of your record. Debt settlement can help clear your record from old repossession charges. Debt settlement companies will negotiate with your lender to help lower the amount of money that you owe on the repossession. The reason that many lenders are willing to negotiate is because they would rather get some of the money that is owed, rather than nothing at all. By lowering the amount owed, it will be easier for you to make the payments and will be paid off in just a couple short years. If your lender agrees to the settlement, they may also agree to take the repossession charges off of your record once the settlement has been paid off. If they agree to do so, make sure to get it in writing with a signature so that they cannot go back on their word.
Old repossession charges can have a lasting impact on your life. In order to leave the past behind you and move forward, consider debt settlement. It is one of the fastest ways to help you get your life back on track.
