Know North Carolina's car repossession laws to protect yourself
Image source: Diego Torres Silvestre via Flickr Creative Commons
If your money is tight, you may not be able to pay all of your bills each month. It can be a challenge to pick and choose what to pay, but you've got to keep the lights on, food on the table and cover your necessities. This may mean that you skip a car payment (or two) because you simply can't stretch your money far enough, but this puts you at risk for repossession. If you are delinquent on your vehicle loan, here's what you need to know about North Carolina repossession law and how to protect yourself.
#1 Prevention is easier than reversing a repossession
First, if you are behind on your payments, the first thing to do is talk to your lender. Depending on how far behind you are, they may work with you. Sometimes they will take missed payments and tack them on to the end of your loan. But if you don't communicate, they will assume the worst and get aggressive on collections, which includes repossession.
#2 Advance notice is not required before taking your vehicle
In North Carolina, advance notice is not required prior to repossessing your car. The option to seize your vehicle if you don't make payments is in the terms of your loan. By not paying, you breach the contract and they can recover the asset that secured the loan. Missing one payment usually won't trigger a repo, but miss two and watch out. Your lender can also take your car if you don't maintain your insurance coverage.
#3 Repo companies don't have to let you retrieve your belongings
While your creditor doesn't have the right to keep your personal property that's in the vehicle when it's repossessed, it can be a huge hassle to get your stuff back. The repo man also doesn't have to let you pull your stuff out before they take the vehicle and they usually will not. If you think you're at risk for a repossession, clear everything out of your car that you can, just in case.
#4 You will still owe a balance after the repossession
If your vehicle is repossessed and you can't afford to make up the back payments to recover it, your lender will put it up for sale at auction. They will then add the costs of repossession to your outstanding balance and deduct the amount they get from selling your vehicle. This usually results in a deficiency balance owed and they will pursue you for this balance and it will negatively impact your credit.
#5 Bankruptcy can help you avoid repossession and catch-up on payments
If you are behind on your payments and want to try and keep your vehicle, you may benefit from bankruptcy. This is not something to take on just because you're late on your car payments, but if you're behind on most of your bills, have a high amount of past-due unsecured debt and aren't earning enough to catch up back balances, bankruptcy can stop a repossession and give you alternatives to keep your vehicle. With a Chapter 7, you may be able to redeem your car for a lower value than your loan balance and with a Chapter 13, you can often lower your balance and then catch up past-due payments over several years.
If you're behind on your bills and can't seem to catch up, contact the law offices of John T Orcutt for a free consultation. We'll take a look at your personal finances and tell you the best way to address your debt dilemma. Call now and come in for an appointment at one of our convenient North Carolina locations.