North Carolina law gives creditors the right to repossess various items such as consumer goods, automobiles, furniture and machinery when a buyer has become delinquent. While property is generally repossessed via foreclosure actions which provides many homeowner protections, repossession can proceed immediately upon a delinquency with no notice.
In North Carolina the purchase and sale contract between the buyer and seller will contain the legal rights and remedies of the parties. Carefully examine the paperwork that was signed at purchase to see what remedies or requirements are available. For example, a purchase contract might allow a grace period on a missed payment. If an item is repossessed within the grace period, such a repossession might be unlawful.
In addition, most contracts for goods must comply with the North Carolina Retail Installment Sales Act, which is set out in Chapter 25A of the North Carolina Code. Review the terms of the contract to ensure that the agreement complies with state law.
Contact the Lender
Lenders generally do not want to repossess an item. Repossession is time-consuming and expensive. When a person falls behind on payments, it is always advisable to contact the lender to see whether an alternative arrangement may be made.
Repossession Rights of a Creditor
Once a buyer misses a payment, North Carolina allows the creditor to immediately repossess the item unless there is some contractual protection. For a leased or financed car, failure to maintain car insurance will provide a creditor with grounds to repossess the vehicle, because not having insurance constitutes a material breach of the contract.
So long as no breach of the peace occurs, a creditor may enter your property for the repossession without providing notice.
A creditor may demand full payment. If full payment is not made, the seller will then auction off the property. If the property sells for less than the value of the note, the lender has the right to seek the difference from the original buyer, in addition to reimbursement for repossession costs. North Carolina does not allow for wage garnishments, so a creditor is likely to seek a civil judgment and lien against a debtor.
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