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Stop Auto Repossession

31 Mar

Your car loan is considered in default after one missed payment because it is now in default of the loan agreement, but the creditor will not take any action until you are significantly past due. The creditor will decide how long to wait and when to exercise a right to repossession. Repossession is the option of last resort. It will not only give you a bad credit rating but you will have to pay the difference between the car loan and the money recovered after an auction sale.

State Laws On Repossession

There is no standard state law on repossession, laws are different from one state to the next. However, repossession is always considered a civil and not a criminal issue. The lender cannot use local law enforcement officials to locate your car. In other words, the car cannot be reported as stolen.

Hiring The “Repo Man”

Since repossessing the car is a private concern, the creditor has to hire a third party, a repossession company, to get the car. A private party cannot open your garage door and drag your car off your property without your permission, but they can wait outside your property and seize it when it is in public property.

Options To Stop Auto Repossession

The first option is to discuss your financial challenges with the creditor. You can negotiate to either have the creditor work with you until you can catch up on past payments or you can redo your car loan and have the outstanding amount attached to the new loan repayment plan.

The second option is to inform your creditor that you wish to sell your car yourself rather than wait for it to be repossessed and use the money from the sale to pay them what you owe. The advantage of this option is that you will pay less from your own pocket this way. You will not only save on not paying repossession fees but you will also be able to sell your for a higher price than can be made from an auction sale. If the sale of the car does not fully cover the cost of the loan, you can make arrangements with the creditor to pay off the difference of what you owe.

The third option is to declare bankruptcy. You should only file for bankruptcy if your debt includes other bills besides that of your car loan. This option will ruin your credit and it should be considered only if you have no other choices.

The fourth option is to evade the creditor, hiding your car, not answering phone calls, and not responding to knocks on your door. Of course, this is not recommended.

Costs Of Repossession

The dirty secret of dealing with a repossession company is that you will not be charged fairly. After a creditor hires a repossession company, you will be paying not only for their costs in locating your car but also for the costs they incurred when they failed to find other cars they went after. These extra costs are because they work on a contingency basis. In order to cover the costs of their car repossession failures, they pass the costs onto their car repossession successes. These costs will be added on to their rates, so they will be hidden. In other words, there are no standard fees. They will depend on how much you have to pay for keeping them in business.

The inventory of charges you get will look something like this:

Repossession fee, $200
Driver fee, $20
Tow to storage, $50
Condition report, $15
Photographs of car, $25
Bagging possession found in car, $10

These numbers depend not on actual costs but on statistically averaged costs of what they need to charge to make up for money spent on cars not found.

How To Get Your Car Back Once Repossessed

If you are not in any position to pay the costs to get your car back and it is absolutely necessary for your financial survival that you have a car to go to your job, then you do have one last option–filing for bankruptcy after repossession.

A law firm can file a Chapter 13 bankruptcy and combine it with a lawsuit called a Complaint for Turnover. This has to be done within two weeks of having your car repossessed.

Your law firm will then attempt one of two strategies. It will work with the lawyers of your creditors to renegotiate repayment because you cannot pay if you have no way to go to work. If this strategy does not work, the law firm will use Chapter 13 to convince the judge that your vehicle is essential to your financial survival. Often in such cases, the car is returned within a few days.

Also if you are interested in knowing where to get bank repo cars or police impound cars for sale, then continue reading these related articles.