If you don't make your car payments, the finance contract that you signed at the time you purchased the car gives the loan company the right to collect their money, using legally available means. Repossession is when the bank takes your vehicle, and sells it to recoup the money you owe. You have rights in this process, and the bank's failure to follow the law can affect their ability to collect the debt.
Taking the Vehicle
If you are late on your car payment, you are at risk to have your vehicle repossessed. If the bank considers you a flight risk, they may repossess the car as soon as 10 days after you become late, but usually, it is two to three months before it takes this step. The agent repossessing a vehicle cannot tow it with someone inside, and he cannot enter a garage with closed doors to repossess a vehicle. Generally, the agent cannot use extremely aggressive methods to take a vehicle, because he must not breach the peace when carrying out his duties.
Personal Property
If the agent takes your vehicle and you are not around, you may have personal property stored in the vehicle, such as car seats. Repossession agents must log any personal property found in the vehicle, and keep the property for a certain length of time, often 30 days. You are allowed to claim it within that time frame. Accessories attached to the vehicle, such as aftermarket stereo systems, must often remain with the vehicle.
Sale
The bank will sell your vehicle in order to collect the amount that you owe. Often, these sales are made at private auctions only open to car dealers, but auctions may also be public. In some states, the bank must notify you of the date and time of the sale, so that you can participate in the bidding. The bank must sell the car in a commercially reasonable manner, meaning they should make every effort to get the highest value possible for the vehicle. You may have the right to purchase your vehicle before an auction, or reinstate your loan by paying the past due balance, depending on your local laws.
Deficiency
Your obligation does not end after the sale of the vehicle. Usually, the sale does not bring enough money to pay off the debt, particularly if the loan is fairly new or if you rolled negative equity from a trade into the loan. The bank will add its repossession and sale fees to the balance of the loan and will attempt to collect the rest from you. The bank can use all legal collection methods, including lawsuits, to collect this balance. If the bank violated your rights during the repossession, you may be able to collect damages, which may include a forgiveness of the deficiency balance.
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