When a vehicle is leased or financed, the vehicle's lien holder is granted certain rights over the property. The lien holder can repossess a vehicle if the purchaser violates a predetermined agreement and fails to make timely payments. The Alabama state legislature has outlined car repossession laws to help avoid misunderstandings between lien holders, recovery agents and debtors.
In Alabama, a lien holder (finance company) cannot initiate any collection attempts, including repossession, until the debtor has defaulted on a payment. The lien holder can first make a reasonable attempt to collect payment. If that fails, the vehicle can be seized. Debtors in default should contact the finance company and attempt to establish a repayment plan which incorporates past due amounts.
Debtors who are seriously delinquent can arrange for voluntary repossession. The vehicle can be picked up by a tow truck or returned to the original dealership. You can avoid the embarrassment of having the car towed away in the middle of the night and also save on expensive repossession charges.
Involuntary repossession typically involves a recovery company bringing a tow truck to the debtor's home. Lien holders in Alabama have the right to seize vehicles at any point after an account has gone into default. Alabama laws prohibits a recovery agent from taking any action which can be construed as a breach of peace. This includes breaking into locked garages, and starting loud arguments that can cause neighborhood disruption.
Selling the Vehicle
Once a vehicle has been recovered the lien holder may sell it at a public or private sale. The debtor must be notified 10 days prior to the sale to retrieve any personal property from the vehicle. If the vehicle is sold for less than what the debtor owes, the debtor is still responsible for the balance.