- 1 What happens when the bank repossesses but doesn’t take possession ever
- 2 What Happens if My Car is Repossessed?
- 3 My car was repossessed; now what do I do?
- 4 Do I Have Any Rights if My Car is Repossessed in Illinois?
- 5 How Long Until My Car is Repossessed After Filing Bankruptcy?
What happens when the bank repossesses but doesn’t take possession ever
Repossessions are not always cut and dry like most people figure. There are various examples of what can happen with repossessions and different reasons for each. As I have stated in another post, sometimes A bank will spend more money to repossess than the actual value of the collateral. But why is that? Easy, the debtor was an idiot and pissed someone off at the bank. Usually when the value is real low and you stop paying for the collateral, the bank will list it as a repossession and just charge it off.
The same goes for when collateral has been totaled and stopped paying on. The bank does not want a totaled unit so they will list it as a repossession in the credit reporting, but ultimately charge it off and leave it where it is. The registered owner is the one that will be liable for all expenses in regards to storage or whatever other expenses might arise on the totaled out collateral.
A typical scenario that went on all the time with car repossessions: A car is behind on payments, the debtor unknowingly parks it in a tow away zone. The car gets towed by a regular tow company not a repo company and storage begins building. The debtor finds out it was towed and calls the tow company but it is too much to get out. The tow company will send the lien holder a letter advising they have the vehicle and the balance due needed. Problem is this letter rarely makes it to the right department at the bank and the tow company gets the car, sometimes tow companies use old addresses or other ways to steal ownership. This is a total scam that the tow companies should never get away with but it happens all the time. Rent a car places lose brand new cars due to this law and tons of repos suddenly become registered to a new owner somewhere along the way and upon investigation, sure enough the tow company sent the bank a letter of lien and got a new title.
The bank repossesses but left me the car
Why bother becoming a car dealer and pay for cars at auction when you can just start a tow company and get your inventory less a tow expense. In the recent years towing companies have expanded into the monstrous car dealerships that do financing also.
Bottom line is that when a bank decides to not repossess the car from you, you still use it but very doubtful the bank will send you the title unless you pay it off. Perhaps an individual can apply for title as well by doing the same thing as tow companies, not sure. Otherwise you may not be able to register the car anymore.
What Happens if My Car is Repossessed?
In Texas, secured creditors are allowed to repossess their collateral (your vehicle) without a court order as long as they do not breach the peace.
Secured creditors (your finance company or bank) are not required to give advance notice of intent to repossess.
There is no set waiting period before a secured creditor can repossess their collateral; if you are one day late on a payment or have violated some other term of the contract, your vehicle may be repossessed.
After repossessing a vehicle, a secured creditor must notify you the car has been repossessed and allow you to retrieve any personal possessions left in your vehicle. You should not be charged for retrieving your property. Nor should you be required to sign a release.
A secured creditor must send a letter telling you that they have repossessed your vehicle; that the car will be sold at either a public or private sale; that the sale will be conducted on or after a certain date and you must be given an opportunity to redeem the vehicle prior to that date.
If the vehicle is sold, the sale price must be applied to the balance of the loan. You may be liable for any deficiency.
The secured creditor may accelerate (call the whole debt due) and require the entire balance of the loan be paid, including a repossession fee, before releasing the vehicle.
If the secured creditor does not send the letter telling of their disposition of the vehicle, they will be barred by Texas law from collecting any deficiency that may be due.
In addition, you may have a claim for statutory damages from the secured creditor.
If the secured creditor wants to keep your vehicle in satisfaction of the debt, they must send you, in writing, their proposal to do so. They must have your consent. You may object or deny their request, preferably in writing. If you refuse, then the secured creditor must send you the notice referred to above, about disposing of the vehicle.
Two tips: make sure the secured creditor has your current address. With regard to the notices described above, they are required only to send them and are not required to make sure you receive them. Second, make sure you keep a complete copy of all your paperwork in some place other than your vehicle; if your car is repossessed, you may not be able to retrieve your papers. You should also know that any agreements for extension of time to make payments which are not in writing will not be enforceable. If you make an agreement for late payments, be sure to send something in writing confirming your agreement.
If you think a secured creditor has not followed the law by repossessing your vehicle or in their disposition of the vehicle after disposition, please call me to discuss your legal options.
My car was repossessed; now what do I do?
If you default on a secured debt like a car loan, the creditor has a right to take the collateral, as long as that can be done without "breaching the peace" (which is why it is often done in the middle of the night). This usually happens after you have missed at least two payments and after threats of repo by the bank.
What you do after you wake up with your car gone from your driveway depends on your overall financial situation. In other words, was the car payment your only problem, or are you dealing with an overall situation of heavy debt that you cannot manage? If it is the former, then the focus is obviously on getting the car back.
In order to do this, you have to make amends with the bank. This usually involves paying the arrearages on the loan (the missed payments) along with the cost of repossession. This is because the bank really just wants your money, not your car.
Under New Jersey law, after repo the creditor must send you a Notice of Repossession and Right to Redeem, giving you the opportunity to pay off the loan (or bring it current) and the repo charge within a certain period of time. If they are planning a public sale, then they must state the scheduled date of the sale; if a private sale, then they must give you at least 10 days notice.
The best thing to do is to call them immediately after the repo and make arrangements to pay. The longer you wait, the bigger the problem. But what if you just don't have the money to bring it current? What if the car is not the only financial problem you have?
Leveraging the Power of Bankruptcy
Bankruptcy can provide a better overall solution to your financial problems, but in order for it to be effective in getting your car back you need to proceed as soon as possible. It also means filing a chapter 13 petition with repayment plan prior to the sale of the vehicle. This would allow you to get the car back without coming up with the money all at once.
Bankruptcy also allows you to prioritize payment of your debt. If you have been juggling payments to creditors, and making the car payment has become more difficult because you have credit card bills to pay as well, then chapter 13 can put the cards at the end of the line, so that you can pay for the car first. You might even be able to lower your car payment!
Losing a car to repossession is often a symptom of a much bigger financial problem. If you are wondering whether you need a solution to a bigger problem, then download my free book, Am I In Too Deep? A Guide to Knowing When You Need to File Bankruptcy in New Jersey to find out if bankruptcy might be the solution.
If you are a South Jersey resident having difficulty paying your bills, and are considering bankruptcy, please feel free to call me at 856-432-4113 or contact me through this site to schedule a consultation in my Woodbury office to discuss your situation. There may well be a solution that will get you back on the right financial track.
If bankruptcy is not the direction you want to go, but you still have creditors to contend with, then download by free book, The Biggest Secrets Your Creditors Don't Want You to Know. Become empowered and protect your rights!
Do I Have Any Rights if My Car is Repossessed in Illinois?
For most people, having a car is a necessity, not a luxury. We use our cars for work, to transport our children to school and to run other important errands. Without a car our already complicated lives become even less manageable. If you fall behind on your car payments, your lender can repossesses its collateral, leaving you without transportation and sometimes, stuck with making payments. The Car Repossession Laws in Illinois do, however, provide consumers with much needed protections.
Although a creditor may repossess your car after once you default on your loan, there are several defenses that you can use to contest the repossession, such as:
- No default - a creditor may initiate repossess without notice if you miss just one payment. However if your lender regularly accepted late payments in the past, you may contest the repossession if the lender did not give you fair warning
- No collateral – the lender may only repossess a car if it is listed as collateral for the loan
- Breach of peace –the "repo" man may not take your car over your objection nor can he use violence or make threats against you during the repossession process. Repo agents may not break into or damage your personal property to get to your car
- Police assistance – Generally, the police may help repossess your car unless there is a court order prohibiting them from doing so
- Insufficient notice of redemption – Car repossession laws in Illinois require your lender to provide you with a redemption notice within 21 days after your car is repossessed. If the lender fails to provide the notices or provides legally insufficient notice, the repossession may be invalid
If you act quickly, Illinois repo laws can even get your repossessed car or truck back — and at a lower monthly payment. You also have the right to retrieve any personal items that were in the car at the time of repossession. Protect your rights and prevent car repossession. Contact DebtStoppers, Bankruptcy Law Firm for aggressive legal representation.
How Long Until My Car is Repossessed After Filing Bankruptcy?
The repossession laws for bankruptcy involving a car will differ due to the type of bankruptcy and depending on the value of the car. With a Chapter 7 bankruptcy, non-exempt assets, like your car, are taken as a part of the “bankruptcy estate” during the bankruptcy process. These assets are usually sold with the proceeds given out to your creditors by the bankruptcy trustee. Any unsecured debts are then forgiven, and your slate is wiped clean. If, by rare chance, more money resulted in the liquidation than needed by to pay off your debt, you get the excess money and unsold assets back. This may not include your car. Why? If your car was secured by a loan with the dealer, it is a secured asset. If you owned your car, no loan, and your car was not sold, and the bankruptcy discharged, you would have no further obligation. In a Chapter 13 bankruptcy, the assets are not taken. Instead, you would set up a payment plan for your debts and pay against the plan over a period of 3-5 years. The repayment plan is managed by a bankruptcy trustee. Given the way this question was asked, assume that we are dealing with a Chapter 7 bankruptcy.
In general, a bankruptcy does not prevent car repossession. Also, you cannot declare bankruptcy to end your car loan in order to keep your car. When you file for bankruptcy and before it is granted, all debt collection activity has to stop until the court hears your bankruptcy case. This means that as soon as you have declared for bankruptcy, your lender cannot repossess your car and also cannot file to begin collecting on the debt. This is true for both Chapter 7 and Chapter 13. As we stated before, in both cases, if your car has a loan against it, it is a secured asset. After the bankruptcy proceedings, you will either lose your car or you will have to catch up on the debt and get current on your loan. If you do not pay, you do not keep the car.
Here is a kicker. If you declare Chapter 7 and it is an expensive or luxury car and you have a lot of equity in your car, then it could be seized as an asset, become part of the “bankruptcy estate” that is seized and sold to pay off your debt. How it works is as follows: you bought a $50,000 car on loan and still owe $10,000 on it. The car may be seized and sold. The $10,000 remaining on the loan gets paid off and the difference is used to pay your other debts.
Once the bankruptcy is discharged, the Official Receiver cannot claim any other assets if you applied for a personal bankruptcy. The Official Receiver will typically claim and seize any equity within three weeks at the earliest and twelve weeks (3 months) at the latest. If you are now discharged, you can now safely sleep with any un-seized assets. In a bankruptcy, if a vehicle is of low value, it is common for it to be left for business use or necessary for travelling to work, especially when there is no other means of public transport, where commuting would be a greater problem because of no car.
The following site is a good source for information: