Repossession allows a lender to take a vehicle back if the borrower can't make payments on it. Per Louisana law, the lender must notify the borrower of their intent to reclaim the car. However, the borrower can also voluntarily relinquish it, which may make it easier on their credit score, as well as reduce any unpaid fees they may owe to that lender.
Car Repossession in the State of Louisiana
The majority of people typically get loans when buying a vehicle. When financing it with a lender, the borrower signs a contract stating that they will make payments to that lender. If they miss payments, the lender can repossess the car. Each state has different rules regarding what lenders and repossession companies or agents can and cannot do when repossessing a car.
Some states allow a vehicle's repossession after a borrower misses one payment. Louisiana law states that the lender can start repossession proceedings if a borrower misses two payments. If a borrower makes payments more than once a month, the state considers them to have defaulted on a car loan if it has been 60 days since their last payment. If they pay once a month, they must be over 30 days late in missing a payment.
Lender Notification Before Repossession
Louisiana law states that a lender must send written notice to the borrower to their last known address before repossessing their vehicle. This notice must contain:
- Borrower's name and last known address.
- Description of the vehicle the lender intends to repossess.
- Statement that reads, "Louisiana law permits repossession of motor vehicles upon default without further notice or judicial process."
Depending on the contract the borrower had with the lender, they may get only one notice. State law does not specify how many days a lender has to send the notice before it attempts to repossess the vehicle.
Breaching the Peace in Louisiana
Louisiana state forbids repo companies from breaching the peace when taking a vehicle. They cannot take it from a closed dwelling, either locked or unlocked. They cannot take it from a private garage or driveway without permission from the borrower. A repo agent cannot force or otherwise threaten the owner of the vehicle when retrieving it.
If the borrower does not give permission for the agent to take the vehicle from their property, they must leave without it, but this will afford a borrower much time – a lender who does not get the vehicle can get a court order to do so. Once this happens, law enforcement will force the borrower to relinquish the car. When an agent takes the vehicle, they will leave the plates with the borrower unless the car was under a lease agreement.
What Is Voluntary Surrender of Vehicle?
Louisiana also allows a borrower to surrender their vehicle voluntarily. They can return it to the lender or lienholder when they cannot meet the terms of their contract.
To do this, they must let the lender know that they can no longer make payments and want to give up their vehicle. The lender will then set up a location and time for them to relinquish the car. When the borrower does this, they should note the contact information of the person they left the car with, the date of its surrender and the location for future reference.
What Happens After Repossession?
After the lender receives the vehicle, it has 30 days to file a Notice of Repossession in the borrower's parish with the Recorder of Mortgages. It will then sell the car at auction. The lender's contract with the borrower can include attorney's fees, court and repossession fees, late fees, and the unpaid loan amount.
The lender will use sale proceeds from the vehicle to offset what the borrower owes on it. Before putting the car up for auction, the lender will send the borrower a Notice of Sale.
Voluntary Repossession with a Deficiency Balance
The borrower may owe money on the car if it sells for less than the loan balance, known as the deficiency balance. The lender will send a Notice of Disposition to the borrower if it wishes to hold them responsible for that balance.
Surrendering the vehicle may make these fees more manageable for the borrower. Repossession, voluntary or involuntary, can remain on a person's credit report for up seven years, but the act of surrender could do less damage to their credit score.
Return of Vehicle or Personal Property
During repossession, the borrower may not have enough time to retrieve their personal effects from the vehicle, but they do have a right to retrieve those belongings. Louisiana allows the borrower 10 days to notify the repo company that they want their personal property, and the agent must make arrangements to return it.
In the meantime, the agent will remove those items from the car and store them for the borrower for a fee. If the agent does not return their belongings, the borrower can contact the lender in an attempt to get them back. The state considers personal property abandoned after 30 days, at which point the agent can dispose of it how it sees fit.
A person may also wish to get the vehicle itself back after repossession. The lender must send them a notice saying they have this right and tell them how much time they have to redeem it before it goes to auction. However, the lender may require the borrower to pay the loan off before getting the car back. If the parties reach an agreement, the borrower should make sure they get everything in writing.
- Pocket Sense: Car Repossession Laws in Louisiana
- Upsolve: Repossession Laws in Louisiana
- Louisana Legislature: RS 6:966
- Credit Karma: Voluntary Repossession: What You Need to Know
- RepoRant: Louisiana Repossession Laws
- LOUISIANA REVISED STATUTES: TITLE 6. BANKS AND BANKING CHAPTER 10-A. ADDITIONAL DEFAULT REMEDIES
Michelle Nati is an associate editor and writer who has reported on legal, criminal and government news for PasadenaNow.com and Complex Media. She holds a B.A. in Communications and English from Niagara University.