In the United States, automobile repossession laws are mandated at the state level. If your car was repossessed and resold by your creditor, you must repay the difference on the car loan, which is known as a deficiency. In most states, you also have the option to buy back the vehicle from the creditor before it is resold.
State Laws
When it comes to repossession law, each state provides specific instructions on both consumer and creditor rights to repayment. To find your state's individual repossession repayment laws, consult a consumer attorney or peruse your state's laws directly on your state legislature website. For a link to all state legislature websites, visit the National Conference of State Legislatures. For legal help, check out the National Association of Consumer Advocates.
Buyback Options
In most states, you have the right to buy back your vehicle before the creditor resells to a third party, which usually occurs in a private sale or public auction. Some states will force the creditor to give you a buyback deadline, while other states allow the creditor to sell without your notice. If you do decide to buy back the vehicle, your state law will dictate the amount you must pay to redeem your vehicle. Depending on your state law, you may pay your creditor the full loan amount, only the overdue amount, or some percentage of the total, plus repossession charges. Another option is to bid on your vehicle at auction, but only if your state allows this buyback procedure.
Waived Deficiencies
If you voluntarily return your automobile, you will still owe your deficiency on the car loan, but you will not be charged any repossession charges, such as the repo man's fees and towing expenses. Whether you voluntarily returned the vehicle or it was taken by your creditor, some states will waive your deficiency automatically if the total amount does not exceed a preset limit.
Considerations
If your creditor did not resell your repossessed automobile in a commercially reasonable manner, failed to warn you before or after the repossession took place, or refused to return the personal property left in your vehicle, consult your state's repossession laws for your legal options. Depending on your state's law, you may have the right to sue your creditor to reverse or lower the deficiency. You may also take the creditor to court if the repo man breached the peace, which usually includes threats of violence, taking your vehicle without your permission or entering certain areas of your property that are off limits.
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