Table of Contents:
- Georgia Auto Repossession Laws
- Michigan Car Repo Laws
- Louisiana Laws on Repossession of a Vehicle
- Car Repossession Laws in Illinois
- Car Repossession Laws in Arizona
- Alabama Car Repo Laws
- Car Repossession Laws in Arkansas
- Car Repossession Laws in Missouri
- Car Repossession Laws in Texas
- Car Repossession Laws in Pennsylvania
- Car Repo Laws in Florida
- Vehicle Repossession Laws in Washington
- Indiana Auto Repossession Laws
- Mississippi Car Repossession Laws
When consumers purchase a car by financing it or leasing it, they must make timely monthly car payments to the creditor. Until the consumer makes her last car payment, creditors retain the right to repossess the vehicle under Georgia state law and the sales contract they entered into. Most sales contracts allow a creditor to repossess the vehicle if the consumer misses a payment, makes a late payment or violates any other term of the contract.
The sales contract provides that the creditor retain a lien on the vehicle. The automobile’s certificate of title must contain a notation that the creditor has a lien on the automobile’s title. In addition, the creditor may retain possession of the certificate of title under Georgia law until the consumer pays off the car loan.
Breach of the Peace
A creditor cannot “breach the peace” while repossessing an automobile. That means the tow truck driver the creditor sends to take the automobile cannot use force, the threat of force or violate any trespass laws while repossessing. If a creditor did breach the peace in affecting repossession, it may be liable to the borrower for any damages resulting from the repossession.
Under Georgia law, if a borrower has paid less than 60 percent of the car loan by the time the creditor repossesses, the creditor can simply keep the car to satisfy the outstanding debt. The creditor, however, must send notice to the borrower of its intention to keep the car. The borrower then has 21 days to object. If the borrower objects in writing, the creditor must resell the vehicle.
If the borrower has paid 60 percent or more of the car loan at the time of repossession, the creditor must resell the vehicle at auction. The creditor can sell the car either at public or private auction. However, all aspects of the sale--time, manner and place--must be commercially reasonable.
The borrower can redeem the car and get it back under Georgia law if she meets several conditions. The borrower must pay all outstanding payments as well as any other reasonable costs the creditor incurred because of the repossession. These costs include penalties, interest, towing fees, storage fees and attorney fees. If the borrower can pay all of those expenses before the creditor sells the car or enters into a contract to sell it, the creditor must return it.
Lien on File
Michigan vehicle code section 217 dictates that in order for a bank or lending institution to repossess a vehicle from a debtor due to nonpayment, the bank or lending institution must have a valid lien filed against the vehicle with the Michigan Department of Motor Vehicles. The lien against the vehicle in question must include the vehicle identification number and the name of the bank or lending institution that holds an interest in the vehicle. It is unlawful to repossess or attempt to repossess a vehicle in the state of Michigan that is not secured with a proper lien.
Protection of Peace
The Michigan Universal Commercial Code section 440-9503 mandates that, while a secured party has the right to repossess a vehicle due to default on the part of the buyer, the act must not be in violation of the law and may not cause a breach of the peace. While it is lawful for the bank or lending institution or anyone acting on its behalf to repossess the vehicle at any time of day or night, physical violence or the threat of physical harm can not be used as a means to obtain the vehicle. The bank or lending institution's representative may also not enter a locked garage or residence in order to gain access to the vehicle without the consent of the debtor.
Right to Redeem
Under Michigan law, the debtor must be advised of his right to redeem the vehicle by paying any past due amounts and any costs incurred by the bank or lending institution as a result of the repossession. This notification must occur prior to the selling of the vehicle through private sale or at auction. Failure to notify the debtor of his right to redemption is a violation of Michigan Universal Commercial Code 440-9506. In addition, if the debtor fails to act once he has been notified of their right to redeem the vehicle and it is sold by auction or private sale, any profits that the bank or lending institution obtains as a result of the sale, minus any amount due and expenses incurred, must be given to the debtor as soon as reasonably possible.
After a debtor defaults on a vehicle loan, the creditor may seize the vehicle. Repossessed vehicles in Louisiana may be sold to pay off the remaining balance of the vehicle loan. According to Louisiana revised Statutes 6:965 through 6:967, self help repossessions are illegal in Louisiana. A self help repossession is one done without prior notice and without a court order. Creditors who wish to repossess a vehicle in Louisiana must obtain a court order to seize the vehicle. According to Law Dog, creditors must submit a certified copy of the judgment that authorizes the creditor to seize the vehicle. Once the creditor has seized the vehicle, he or she must file an affidavit with the court verifying that the creditor has taken possession of the vehicle.
Reinstatement and Redemption
Louisiana creditors may reinstate a vehicle loan if the debtor provides payment for all past due amounts and agrees to remain current with future payments. If reinstatement is not an option with a creditor, the debtor has a right to redeem the vehicle after repossession. Redeeming the vehicle requires the debtor to satisfy the entire remaining balance on the loan, including any costs associated with the repossession of the vehicle. Costs may include legal fees, holding costs and the cost of scheduling a repossession sale. Louisiana law requires the debtor to redeem the vehicle before the creditor has made arrangements for the sale of the vehicle.
Creditors may choose to sell a repossessed vehicle in a public sale to satisfy the remaining loan balance. Louisiana creditors have the option of retaining a vehicle instead of selling it. A creditor who wishes to retain a repossessed vehicle must give written notice to the debtor informing him or her of the creditor's intentions. Debtors have a right to object to the creditor retaining the vehicle. They must send written objections to the creditor within 21 days of receiving the notice from the creditor. If a creditor sells the vehicle in a public auction or private sale, the debtor will be held liable for any amounts that are due after the proceeds of the sale are collected. Proceeds will be added first to the cost of repossession, followed by legal fees and the remaining proceeds will be added to the remaining loan balance. Any amount that is still owed on the loan is known as a deficiency.
Most car purchase agreements include a provision that the car will be collateral for the purchase amount. This means that if you do not pay the agreed upon amount on time, the seller can repossess the car. Every state has it’s own laws that set out the procedure for repossessing property. Under Illinois law on car repossession, the seller may be able to take your car without prior notice and without getting a court order.
Secured Interest and Default
This is true if the seller has a secured interest in the car and if you are in default on your payments. A secured interest means that the there is a written agreement that says the seller has a secured interest in the car or that the seller can repossess the car if you do not pay the purchase price on time. A default is a failure to pay under the contract. If your written agreement says you will be in default if you are late on one payment, then being late will allow the seller to take the car.
The seller can send someone to break into the car and take it without telling you. The reposesssion agent can follow you and take the car from the street, a public garage or take it from your driveway in the middle of the night. The seller’s agent cannot break into a locked garage or take the car if you are there and telling the person not to take it. To take it when you are there and objecting would be a breach of the peace.
If the seller’s agent takes the car over your objection, you cannot try to forcibly stop him or her, but you should get witnesses, photographs or a video of the event to use later.
If you are unable to make your car payment, you can work out a different payment schedule with the seller; sell the car yourself; pay the loan, and get a cheaper car; return the car to the seller with the agreement that the seller will take the car in full or nearly full satisfaction of your loan; or, in some situations, file for bankruptcy. Filing for bankruptcy puts the repossession process on hold.
Getting Your Car Back
After the car has been repossessed in Illinois, the seller has to send you a notice if you have already paid at least 30 percent of your loan before your default. The notice must be sent within 3 days of the repossession and give you 21 days to redeem your car. If you pay the default amount, late fees and repossession fees within the 21 days you will get the car back and your loan agreement will be reinstated. If you have not paid 30 percent of the purchase price before your default, you can still get the car back by paying the full amount remaining on the loan any time before the seller resells the car.
Sale of Car After Repossession
The seller has to send a notice after a repossession saying that they will apply to the Illinois Secretary of State for title to the car, which will allow them to resell the car. If the car is resold, the seller will apply the amount from the resale to the repossession fees and resale cost and to the amount due on your loan. Any amount still due on your loan after that will be a deficiency and the seller can sue you for that amount. You can delay the resale of a car by listing defenses you have to the repossession within 21 days on the form the seller sends you.
If the repossession is done unlawfully, such as a situation where the car is taken over your objections, or repossessing when you were not actually in default, then the seller has to give the car back and pay you damages. The seller has to follow the procedures all the way through the repossession process, by giving proper notices, with required content and being accurate. If the seller makes a mistake this can be a defense to the repossession and any deficiency action.
In addition to Arizona law, the sales contract between the borrower and the creditor governs the terms of the agreement. The borrower purchases a car with the money the creditor lends. In exchange for the loan, the borrower agrees to make monthly payments to the creditor, which includes payments on the loan’s principal and interest it accrues. The sales contract codifies the creditor’s security interest in the car and usually provides provisions for the creditor’s repossession rights.
Under Arizona car repossession laws, the creditor must “perfect” its security interest in the car. The security interest acts as a lien on the car and the creditor must ensure the car’s certificate of title includes a notation describing the lien. The certificate of title, with the lien noted on it, must then be filed with the Arizona Department of Transportation. If the creditor’s security interest is not “perfected,” the creditor cannot lawfully repossess the vehicle without going through a court proceeding.
If the borrower stops making payments or violates any other provision of the sales contract, then Arizona law considers the borrower to be in “default.” If the borrower goes into default and the creditor has perfected its security interest, then the creditor can repossess the car without going to court. That means the creditor can send a tow truck to pick up the car. However, the tow truck driver cannot “breach the peace” when he repossesses the car. In other words, the tow truck driver cannot use force or the threat of force or violate Arizona trespass laws when he repossesses.
Arizona law allows a borrower to redeem the car before the creditor disposes of it or enters into a contract to resell it. To redeem the car, the borrower must pay all back car payments as well as any reasonable costs the creditor incurred as a result of the repossession. These costs can include reasonable attorneys’ fees.
The creditor can resell the car at public or private auction. However, all aspects of the sales must be commercially reasonable. If the creditor does not recuperate all of its losses in the resale, then it can attempt to get that money from the borrower who defaulted.
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.
The sales contract between the buyer and creditor usually defines what behavior constitutes default. For example, if the consumer misses one payment, that could put her in default. Some contracts may define default as 90 days without making a payment. However defined, once a car buyer in Arkansas goes into default, the creditor can initiate repossession. Arkansas has adopted the Uniform Commercial Code, which allows creditors to repossess vehicles when the purchaser goes into default without initiating a judicial proceeding. In other words, in Arkansas, creditors can repossess cars without having to go to court first. However, the creditor can only repossess the vehicle if it does so without breaching the peace.
Under Arkansas law, once the creditor repossesses the car, it can resell the vehicle in a public or private auction. Most states, however, give the consumer a short period of time in which they can "redeem" the vehicle. Arkansas allows ten days from the time of the repossession where the consumer can redeem the vehicle. To redeem, the consumer must pay the full amount left on the car note and any costs and interest that the sales contract specifies. For example, if the consumer defaults on a $20,000 after making $5,000 of payments, to redeem the vehicle, the consumer would have to pay the full $15,000 left on the note plus costs and interest.
When the creditor resells the vehicle, it must do so in a "commercially reasonable manner." That means the seller, for example, cannot sell a car worth $20,000 for $1,000. In Arkansas, if the creditor resells the vehicle in a commercially reasonable manner and does not recover all of the money owed, then the creditor can go after the consumer for a "deficiency judgment." For example, if a consumer defaulted with $15,000 owed on their car note, the seller repossessed, waited the required ten day period, and resold the vehicle in a commercially reasonable manner for only $12,000, then the creditor could go after the consumer for the remaining $3,000 plus costs and interest.
Please consult a qualified attorney licensed to practice law in Arkansas to determine how the law applies to the facts of your situation. Arkansas law, like all laws, is subject to change.
In Missouri, your creditor may legally seize your car once you default on the car loan. Creditors can repossess through a judicial or non-judicial process. That means the creditor can file suit against you in court (judicial process) or can simply seize your car with a tow truck (non-judicial). If creditors choose the non-judicial process, under Missouri law § 400.9-609, they must not "breach the peace." That generally means the creditor must give you notice that you are in default, demand payment, give you notice that the sales contract or lease is terminated, and then give you notice that the creditor intends to take repossession. In addition, if a creditor chooses to non-judicially repossess your vehicle, the creditor must do so without disturbing public order.
Once the creditor has seized your vehicle, it can be sold in a public or private auction. Missouri law § 400.9-610 requires that all aspects of the sale must be "commercially reasonable." In other words, the creditor should sell the vehicle for fair market value. The law does not require that "commercially reasonable" be exactly fair but market value, but if you owe $15,000 on your car note then your creditor should not sell it for $500.
Once the creditor sells the vehicle, you may be liable for the difference between the sales price and the money owed on your car note. For example, if you owed $15,000 on your car note and the creditor sells the car for $11,000, you still owe the creditor $4,000 plus any fees and costs stated in the sale contract. That amount is called a "deficiency." A creditor can go to court and seek a judgment against you to recover the deficiency. A creditor, however, has the burden in court to show that the vehicle was disposed of in a commercially reasonable manner.
This article is intended to give a basic overview of Missouri repossession laws, which are subject to change. It is not intended to give legal advice. To determine how the facts of your situation apply to Missouri law, consult a qualified attorney licensed to practice law in the state of Missouri.
The right to repossess a car stems from the relationship created whenever parties enter into a security interest. This relationship exists when a creditor (the loan company) gives the debtor (the person buying the car) a loan and takes collateral. Usually, the collateral in a car loan is the car itself. So, if the debtor fails to make payments, the creditor can take the car to satisfy the terms of the loan. In Texas, the security interest against a car (usually in the form of a lien) must be indicated on the back of the title. The car title is needed by the owner if she wishes to operate it, register it, sell it or convey it. Once the security interest is listed on the lien, the security interest is considered "perfected," meaning the creditor can repossess the car if the debtor defaults on the loan.
Personal property subject to a security interest can be repossessed by a creditor or collections agent if the debtor violates or defaults on the terms of the loan or lease. Usually, this happens when the debtor falls behind on the monthly payments. In this case, the creditor can take repossession of the car or any other collateral named as part of the security agreement. The creditor does not have to file a lawsuit or receive the permission of the court to do this, and, as long as the creditor does not violate any laws in recovering the property, it can do so whenever it chooses.
Right to Redeem
If a debtor has her car or property repossessed in Texas, the law allows her to redeem the property. This means that the debtor can take the car back by making a full payment or satisfying the terms of the loan. This can be done anytime before the creditor has disposed of the property. The debtor can be asked to pay any reasonable expenses the creditor may have incurred in repossessing or storing the property, as well as reasonable attorney fees and legal expenses, according to Texas Statutes 9.623.
Breach Of Peace
Lenders in Pennsylvania are required to not breach the peace when repossessing a car. Cars parked on the street, in a driveway or in a public parking lot may be repossessed by the lender. However, if the car is housed inside a locked garage or gate, the lender may not enter by unlawful means to repossess the vehicle. According to Law Help.org, lenders may not repossess a vehicle unless there is an agreement in writing that clearly states the lender can repossess the vehicle if the debtor fails to make the agreed upon payments. Lenders who breach the peace during a car repossession may lose the right in court to sue a debtor for any deficiencies that arise from the sale of the vehicle.
Once the lender has repossessed the car, a sale of the car may be scheduled. Pennsylvania law requires lenders to provide the debtor with a notice of sale before the sale of the car. This notice must provide the debtor with information in writing of the date, time and location of the scheduled sale. Cars are usually sold at auction to the highest bidder. Personal property found inside a repossessed car may not be kept by the lender. The lender must provide the debtor with information regarding the recovery of personal property. Lenders must return the license plates of the car to the registered owner.
Debtors in Pennsylvania have the right to redeem the car, if they can pay the entire amount of the loan before the scheduled sale of the vehicle. The debtor must also pay any fees incurred during the repossession of the car, attorney's fees and storage fees for the car. Once the vehicle has been sold, it is too late for the debtor to attempt to redeem it.
Debtors are required by law to pay any deficiencies that occur after the sale of a repossessed vehicle. If the lender sells the car, but does not have enough to pay off the entire balance of the loan, a deficiency is created. Lenders are allowed by Pennsylvania law to sue a debtor for any deficiencies that may occur after the sale of the car.
In Florida, failure to pay within 30 days allows the lender to repossess your car under a process that's spelled out in Chapter 537.012 of Florida's laws on title loans. A repossession is hard to fight once it happens, but the law does regulate how the lender can go about it, and resell a car to pay off the outstanding loan balance.
Per Chapter 537.012, the lender can seize your car as soon as you default, or miss a loan payment -- unless he authorizes an extension to help you catch up. For example, you could ask to change the monthly due date, or suggest, "I can pay 'x' amount by 'y' date." Many lenders will postpone further action if it looks like you will pay later, reports the Florida Attorney General's office in an online article, "How to Protect Yourself: Automobile Repossession." Just remember to get written confirmation of any changes in your auto loan agreement.
If you can't resolve the issue, the lender may send a repo man to seize your car any time without notifying you, according to the Attorney General's office. However, a repo man can't use threats or force, enter homes and businesses without the owner's permission, nor move barriers or gates to take a car, advises the Florida Department of Law Enforcement. Any of these actions can trigger a breach of peace complaint from the borrower. However, if the repo man does seize your car, he must notify local police in two hours, FDLE's memo states.
Once a lender reclaims the car, he must notify you of any proposed sale in 10 days, as Chapter 537.012 requires. He must also send a written accounting of remaining principal and interest, plus repossession and resale fees. You can then buy your car back by paying all required fees with a money order or certified check. The lender may also attempt to keep the car. However, state law allows you to demand that your car be sold, which might prove useful if its estimated value exceeds what you owe on it, states the Attorney General.
Recovery of Personal Items
Per Chapter 493.6404, the lender must return any personal property that's left inside the vehicle, following payment of reasonable inventory and storage fees. If you don't claim your property in 45 days, the lender may dispose of it as he wishes. He must also keep records of the contents for two years, and turn over any illegal items that he finds to law enforcement.
Lenders can still sue to recoup any debts that remain once your car is sold. Such amounts are called deficiency judgments, which the lender can seek under Chapter 537.012 -- plus attorney's fees and court costs -- within 30 days. In that case, you will receive a notice to attend a court hearing, where you can respond. One possible defense is failure to get fair market value for your car, as the law requires, advises the Attorney General's office. Other defenses exist if the borrower can prove the lender committed breach of peace offenses in repossessing the car, or can't account for valuable items like luggage racks and stereo systems.
Statutes of Limitations
Chapter 95.11 outlines a five-year statute of limitations for collecting a car loan. However, if a creditor wins a legal judgment, and can't collect on it right away, the law allows him 20 years to pursue it.
According to the Washington state UCC, whenever a seller negotiates the sale of a vehicle with a buyer and the buyer does not have the money to pay for the vehicle in full, the seller is permitted to enter into a contract with the buyer for an agreed-upon payment plan. During the payment plan, the seller is permitted to place a lien on the title of the vehicle to ensure that the buyer keeps the terms of the contract.
This makes the seller the lien holder of the vehicle, which is considered the secured party to the contract and the legal owner of the vehicle.
Once the buyer fails to keep the terms of the contract, the seller is permitted to issue to the buyer a ten-day notice that the seller intends to "stop delivery" of the vehicle. The buyer then has ten days to bring the contract back into the agreed-upon terms by either making the necessary back payments or renegotiating new terms.
Once the ten-day grace period has expired and the buyer has not resolved the issue, the contract is now in default. The seller is now permitted to take repossession of the vehicle in a peaceful manner. Once the vehicle is repossessed, the seller is required to find another buyer. The old buyer must be notified of the amount of money that the new buyer pays for the vehicle. That amount must then be deducted from the total amount that the old buyer owes to the seller.
Seizure of the Vehicle
A creditor may have the right of possession immediately upon default of a note. Creditors are allowed to seek repossession without obtaining prior judicial approval. While a repossessor is not required to obtain judicial approval, she cannot breach the peace under Indiana Code. This means while she may enter your property to seize the vehicle, she cannot cause damage to the property and may be liable for any damages she causes. In addition, Indiana requires a repossession agent to notify law enforcement prior to repossession of a vehicle or watercraft.
Selling the Repossessed Car
A creditor may opt to retain a repossessed car as a discharge of the debt, or sell the vehicle at auction. If the debtor has paid 60 percent of the loan on the vehicle, then under Indiana law, the lender is required to sell the vehicle in order to discharge the debt.
If there remains an outstanding amount due after sale of the vehicle, the creditor may initiate an suit against the lender to recover the remaining debt outstanding. Indiana law does protect purchasers of lower cost vehicles from facing both repossession as well as a judgment, Indiana law requires a creditor of a vehicle with a purchase price less than or equal to $3,200 to choose between repossession as full discharge, or file a judgment for the monetary value, but not both.
Dialogue with the Creditor
Just as a creditor has the legal right to repossess upon a late payment without judicial approval, it is advisable when facing a possible repossession to contact the lender and explore the possibility of coming to an arrangement. Lenders may be willing to enter into revised payment plans, particularly if the borrower can show her inability to pay is temporary in nature.
Secured sales contracts usually define what constitutes a default. A default typically occurs when the purchaser stops making payments. Upon default, a creditor has the right to repossess the vehicle by either obtaining a court order or by sending a tow truck driver to repossess the vehicle. During a repossession, a repo agent cannot use force or the threat of force, according to Mississippi law.
Once a creditor repossesses an automobile, the creditor has the right to resell the car. However, Mississippi law allows the borrower to redeem the vehicle prior to any sale. The borrower must pay the money she owes the creditor, plus any reasonable expenses the creditor incurred during the repossession. If the borrower can redeem before the sale, then the borrower can get the car back. However, if the borrower agreed in the sales contract to waive this right, she cannot redeem the vehicle or get the car back.
If the creditor resells the car in a commercially reasonable manner, the proceeds from the sale will apply to the remaining debt the borrower owes the creditor. In other words, if the borrower owed $10,000 on the car and the creditor resold the car for $8,000, the borrower will only have a $2,000 debt to the creditor, plus any reasonable expenses the creditor incurred because of the repossession. The creditor can pursue that amount of money, known as a "deficiency," from the borrower.
Please contact a qualified attorney licensed to practice in Mississippi to determine how the specific facts of your situation applies to Mississippi car repossession laws, which are subject to change.