Car Repossession Loopholes
The consequences of a financial crisis are extensive. You may struggle to feed yourself or your family, you may make late payments on almost everything, you may never have the money to do a single fun activity, or you may even struggle to keep your car or your home. If you’re at risk of losing your car to repossession, you may find yourself Googling things like: ‘how to hide your car from repossession’ or ‘how to avoid car repossession.’ Luckily for you, the legal team at Eric Wilson Law LLC has listed several car repossession loopholes that don’t include turning off tracking devices in your car.
For more information on how to get your finances under control, call Eric Wilson Law LLC today at 205-349-1280 today.
What is Wrongful Repossession?
If you fail to pay your car loan on time or if you fail to meet the terms of your loan agreement, you will go into what’s called default. When you go into default, the company that gives you an auto loan is allowed to repossess your car at any time, even without a court order.
So a wrongful repossession is when a repo man takes back your car even if you’re not in default or even if you have fixed your default by making up car payments. A wrongful repossession could also occur if the repo man seizes a car illegally, by breaking into your private garage or using violence, for example. If your car is wrongfully repossessed, you have grounds to pursue legal action.
When Can a Car Be Repossessed?
So you may be asking yourself: when can a repo agent legally seize a car? According to the Federal Trade Commission (FTC), a repossession agent can seize your car as soon as you go into default from failing to make monthly payments on your car. It’s important to remember that lenders don’t have to notify you before they repossess your car.
What is a Deficiency Balance?
Car repossession is only the first step in taking care of an outstanding loan. Once repossession agents seize your car, many lenders will sell it at an auction in an attempt to cover the majority of what you owe in loan payments. Unfortunately, auction money generally isn’t enough to pay off this loan balance. So what’s left over after the auction is called a deficiency balance. The deficiency balance is what you owe to the lender after they seize and sell your car.
What Happens if You Hide Your Car From Repossession?
Hiding your car may create more problems for you down the road. You could successfully hide your car for a short period of time in order to make up one or more missed payments and avoid repossession. But if you deliberately hide your car from the repo man with no intention of paying off debt in order to prevent repossession, you could get yourself into some major legal trouble.
For example, hiding your car from repo men could force lenders to seize your car through replevin. Replevin is basically when a lender sues you and obtains a court order compelling you to give the car back. If you still refuse to give the vehicle back, you could face a variety of civil and criminal penalties.
How To Avoid Car Repossession
A simple Google search will provide a variety of methods to potentially avoid repossession – such as turning off your car’s GPS tracking device or keeping your car in a private garage or on someone else’s private property – but these methods rarely work in a debtor’s favor. The best way to avoid car repossession is not to remove a GPS tracker but to work towards financial stability. Below, we list the best, most effective car repossession loopholes.
Make Up Late Payments
The most obvious way to prevent a repossession company from seizing your car is to make up your missed payments. It’s important to remember that all car loans are different. Just because you’re a few days late on your payment, doesn’t automatically mean you’re in default. That’s why you need to read your car loan agreement carefully. Some agreements don’t consider you in default until you’re more than 30 days late on a payment.
So if you’re not in default yet according to your loan agreement, do your best to make up your payments and all other applicable fees. This should eliminate your risk of getting your car seized by repo agents.
Reinstate the Auto Loan
Reinstating a car loan can prevent repossession or allow you to get your car back if it’s already been repossessed. Reinstating an auto loan, also called the right to cure a default, basically means that you pay off all past due car payments in one lump sum. You can only reinstate one time, though. So if you reinstate, keep your car, miss a future payment, and get your car taken away again, you can’t reinstate again.
All debtors have the right of redemption when repo men seize their car. The right of redemption sounds very similar to reinstating an auto loan. Basically, if you pay off the entire outstanding loan on the car plus repo fees and storage fees, then you can get your car back. The catch is that you have to do this before your lender sells the car in an auction. Once they sell your car, you can’t get it back.
Car redemption is not always a realistic option for many debtors. If you couldn’t afford to fulfill your monthly payments on the car, then you likely can’t afford to pay off the entire car loan. Additionally, car redemption may require you to pay way more than the car is worth in order to get it back. Therefore, the right of redemption may not be in your best interest.
Sometimes though, the outstanding balance may be pretty small and approximately equal or less than the worth of the car. In this case, redemption may be a good option for you to get your car back.
Negotiate With Creditors
You may be able to negotiate with your creditor in order to keep your car, get your car back, or reduce the amount of debt you owe. For example, you could negotiate in the following ways:
- Voluntarily Surrender Your Car: In exchange for simply handing over your car, you could get your creditor to reduce or dismiss your deficiency balance. Creditors are more likely to agree to this because it will save them the time, money, and trouble that goes into repossessing the car themselves. In order for this to work in your favor, you must get the creditor to agree in writing that they will reduce or dismiss your deficiency balance if you voluntarily surrender your car. If you don’t get this agreement in writing, the creditor could easily break the verbal agreement.
- Sell Your Car: When a creditor sells a car at an auction, they often don’t sell the car for as much as it’s worth. If you offer to sell the car yourself, you could potentially sell it for an amount equal to or more than it’s worth and use that money to pay off your debt. Again, selling the car yourself could save the creditor time, money, and trouble. In order to make this work, your creditor must be patient and cooperative, which are two adjectives that don’t describe most creditors.
Refinance the Car Loan
You could refinance your car loan. This means that you take out a new loan in order to pay off the old loan. Refinancing a loan comes with a large set of pros and cons, so it’s important to think carefully before making any decisions. But one of the biggest pros to refinancing a loan is that your monthly payments may be more manageable than your last monthly payments.
Other things to consider before refinancing a loan are: is this new interest rate lower than my last interest rate? Will my car still have value by the time I pay off this new loan in three to five years? Does this new loan require me to make an upfront payment?
File for Bankruptcy
Filing for bankruptcy may prevent car repossession (depending on the state you live in) and help resolve your current financial crisis. It’s important to note that filing for bankruptcy in Alabama won’t help you get your car back if a repo man has already seized it. However, filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy in Alabama can prevent:
- Home foreclosure
- Car repossession ONLY IF you use your wildcard exemption specifically for your car
- Further harassment from debt collectors
- Wage garnishment
If you’re looking to solve your money worries and get your debt under control, it’s okay to ask for help. Eric Wilson has more than 25 years of experience in helping people in the Tuscaloosa, AL area achieve financial freedom. Allow him to help you save your car and your bank account.
Your Rights as a Borrower
The entire car repossession process can make you feel like you have absolutely no rights. This isn’t true. As a borrower, you have numerous rights, whether you missed a payment or not.
Firstly, even if you don’t have the right to keep your car anymore because you missed a payment, you still have the right to keep the items inside your car. A lender must inform you of the personal property left inside the vehicle and allow you to retrieve the belongings.
You have the right to feel safe on your own property. For example, if your car is inside your garage, a repo man cannot make you feel unsafe by forcing their way into your garage or your home in order to repossess the vehicle. They also can’t threaten you verbally or physically in order to take your car. However, if the car is just sitting out in the driveway, a repo man can certainly drive up and take your car.
Lastly, you have a right to receive a deficiency letter from your lender about your deficiency balance.
Call Eric Wilson Law LLC Today for More Car Repossession Loopholes
If a lender rightfully or wrongfully repossesses your vehicle, you need legal representation from Eric Wilson Law LLC on your side. Our legal team will defend your rights, help you get your car back using various car repossession loopholes, and help you get your finances under control in order to prevent a future repossession. Call 205-349-1280 to schedule a free consultation with us.