How did it get to be like this?
Although I’ve never had a car repossessed (yet?), I’ve been on the edge a few times. And, if you’re anything like me, I’m guessing that at one time or another; we might have shared a common experience when it comes to financial matters. You wake up one morning to find out you’re either broke or almost broke.
Now, there could be a ton of reasons for these unfortunate sets of circumstances to take hold. Maybe you lost your job, maybe other bills such as credit cards and mortgage payments and doctors bills have all hit at once. Maybe you're in over your head with your bookie and rather than getting your arms or legs broken, you have to settle with him and other bills, such as car payments, are forced to slide for awhile.
Well, if you’ve borrowed money from a creditor to finance a car, you better get back on track with those folks real quick. The last thing you want to do is have to deal with the repo man. They don’t want to know or don’t really care about how you got to be in the state you’re in. Granted, it’s gotta be a pretty shitty job but somebody’s gotta do it.
Should you find yourself in such dire straits and have fallen behind on your payments, your creditor has the right to repossess your vehicle. This holds true until the last payment is and the title is transferred or until you’ve fulfilled your leasing obligation. Usually these terms will be spelled out in the fine print when you originally sign your loan or lease agreement for that sweet ride that you carved. Chances are, your creditors don’t even have to threaten to take you to court or, for that matter, to give you any advance warning that they’re hot on your heels and want the vehicle back. Here in the states, these rules vary from state to state but in the long run, you’re the one that suffers.
Gone in Sixty Seconds
In most states, your creditor has the right to seize your car the moment you start falling behind on your payments. They can also grab it if you don’t fulfill other obligations listed in your contract such as providing full coverage insurance during the life of the loan.
When the time comes, they can even enter your property such as a garage and seize the vehicle as long as they don’t violate something called a “breach of peace”. Naturally they can’t threaten you with bodily harm or anything like that and from what I’ve heard most of the folks in the repo business conduct themselves with the stealth akin to a ninja. They usually come under the cover of darkness and are in and out before you know it.
Dude, Where's My Car?
Picture this. Suppose you wake up one fine morning with the sun shining and the birds chirping. You gulp down your morning coffee, give your loved one a peck on the cheek and head out the door to make your way to work. All seems right with the world until you discover that the garage or driveway is empty or that primo parking spot you nailed last night now sits empty. You think to yourself “What the #$%&?” and consider the possibility that your ride has been stolen.
Chances are that’s not the case and while you were dreaming sweet dreams, you were paid a little visit by the repo man who left without so much as handshake or a smile.
What happens now?
Now that the car is back in the hands of your creditor, they’ll probably give you a call and let you know what happened. The reason for this is twofold. They might want you to cancel that stolen vehicle report you filed with the local authorities or they might actually hold on to the car and give you a chance to get even with your payments. In most cases though, they’re contacting you to tell you that the vehicle will be sold at either a private or a public auction and that you have the right to bid on the value of the car.
Some states allow you to get the car back by paying back any arrearages and expenses such as storage associated with the repossession. You may even be able to reinstate your original loan agreement as long as you agree to make any future payments in full and on time. If you don’t, be prepared for the cycle to repeat itself.
What about my stuff?
Most of us keep some kind of personal belongings stashed somewhere in the car. Maybe it’s a set of golf clubs inside the trunk or that laptop left on the backseat. Either way, you have to prove that they were there in the first place and your creditor must make a “reasonable attempt” to return those things to you before it hits the auction block.
Who cares, it was a lemon anyway.
Well, for starters, you should care. Besides being a huge hit on your credit report chances are you’re going to be liable for any difference between the selling price of the car and the amount you still owed on it.
For instance, when the car was repossessed, you had an outstanding loan balance of $3000. At auction, the car goes for $2000. Guess who’s in the hole for the difference plus any fees and charges associated with the sale? That’s right my friend, it’s you and if the amount is large enough, be prepared to be dragged into court by your creditor in an effort to recover it.
How do I get out of this?
Well, by not being there in the first place would be the obvious answer but it’s too late for that. You might be able to strike a deal and re-negotiate your loan with your creditor. Depending on your circumstances and how far you are behind some of them will and some of them won’t. For those that will, make sure you get any agreed upon changes in writing. For those that won’t, you might be able to offer up a “voluntary repossession” where you turn the car back over to them and avoid the costs associated with the repo itself. In that case, you’d still be liable for the difference between the buying and the selling price of the car.