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Know your rights about car repossessions


Inside a typical house in a pretty ordinary neighborhood, a husband and wife sit at their kitchen table well after dinner, staring stoically at one another. Scattered in front of them is an array of half-torn envelopes and perforated slips of paper with bold red type. Words like "urgent" and "past due" and "collections" stand out like blood on snow. While outside, a person casually strolls into their driveway and stops at the family minivan. A key is inserted into the lock. Moments later, the couple notices headlights wave across the kitchen and the confused silence is broken by the sound of them hurrying through the house to see what's happening outside. In the driveway, where their van was parked, remains only a child safety seat, a few CDs and coffee mug with a heart on it.

While this situation may sound like something from fiction, it is hardly made up. People facing financial hard times often see them magnified by the loss of a vehicle through repossession. However, there are protections in place to prevent people from losing their cars in this manner. And unfortunately, even many of the creditors who hold car loans don't know the rules.

Most states do allow creditors to repossess cars once in default but it needs to be stated clearly in the payment agreement. At any point, if you changed your payment date to potentially improve your ability to pay, it's possible the terms of the original contract no longer apply. Thus, get any changes or agreement alterations in writing so you can establish a solid paper trail of your dealings with that organization.

Even though a "repo company" can come on to your property to get the vehicle, generally, they are not allowed to cause any sort of disturbance that could be considered a "breach of peace." This means that physical force, threats of any kind or entering a secure area, like a garage, is not allowed. Additionally, should that violation occur, you may be due compensation for any damage the repo company causes. A breach of peace also puts you on solid ground should the creditor attempt to sue for a deficiency judgment. This sort of judgement seeks to reimburse a creditor for the difference between what you owe and the price for which they can sell the vehicle.

If the creditor decides to sell the vehicle instead of keep it for compensation, some states require them to alert you to the sales date so you can have the opportunity to buy it back, whether at auction or in a private sale. You may also have the ability to redeem the vehicle directly from the creditor for the full amount you owe.

Personal property left in the vehicle is yours, so a creditor is not allowed to claim it as part of what is owed. Depending on the state, they may be required to let you know exactly what they found and let you get them back. This aspect of a repossession can quite often escalate into additional legal issues, as a vehicle often changes hands a few times during a repossession. Some things may get lost along the way and yes, even stolen.

As with almost all issues related to serious debt problems, it can be immensely beneficial to sit down with a bankruptcy attorney to understand your rights. While credit counselors can help sometimes, an attorney is going to be a much better resource for addressing the state by state legalities of vehicle repossessions.

Filing bankruptcy can stop repossession and allow you a chance to get current over a period of months or years. Stopping repossession is one of the things that bankruptcy does best.

Need to stop a repossession or a foreclosure or just get more time to pay? Whether or not you end of filing bankruptcy, you need to find out how this option works. You will be surprised. Bankruptcy is powerful and it does not work the way you think. Find out more. In North Carolina, set up a FREE initial consultation with the Law Offices of John T. Orcutt, offering services in 28 different counties through 4 offices in Raleigh, Durham, Wilson and Fayetteville. During normal business hours, just call toll free to +1-919-646-2654. Or visit our website at, available 24/7.

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