The laws of the commonwealth of Virginia establish certain procedures through which a lender is able to repossess a vehicle when the underlying loan is in default. Laws in Virginia permit both a private (peaceful) repossession as well as judicial repossession as necessary. Before pursuing a repossession in Virginia, a lender must understand the basic elements of applicable Virginia law.
Repossession laws in Virginia permit a private party or business to take physical possession of a vehicle when the loan on it is in arrears, provided the taking is done peacefully. If the titleholder to the vehicle is present and objects to the repossession in a manner that breaches the peace, the individual attempting to repossess must withdraw and take the vehicle at another time. Provided the repossession proceeds peacefully, a court order and judicial intervention is not necessary.
Virginia law encourages voluntary repossession. A voluntary repossession occurs when the lender contacts the titleholder and requests that she surrender the vehicle. Typically, the lender relieves the titleholder of any further liability for the loan, even if the loan is greater than the actual value of the vehicle.
If a lender determines that peaceful repossession is impossible, Virginia law requires a court order and the involvement of law enforcement to obtain the vehicle. The lender must file a lawsuit in the commonwealth court where the vehicle is presumed located.
The lawsuit contains three elements. First, the lender requests that the court issue an order affirming that the lender is entitled to repossess the vehicle because of the delinquent loan. Second, a companion order directs the sheriff's office to assist in obtaining the vehicle. Each county sheriff's department maintains a civil division or officer assigned to these types of tasks. Finally, a lawsuit includes a request that the lender be awarded a deficiency judgment if necessary.
In some repossession cases, the value of the vehicle is below the outstanding balance on the loan. A lender is entitled to what in Virginia is known as a deficiency judgment. A deficiency judgment is an order from the court requiring the owner of the automobile to not only surrender the vehicle but pay to the lender the difference between the value of the vehicle and the outstanding balance on the loan, together with interest and any other costs, fees and charges.