Violating Car Repossession Laws: How You Can Get Damages

In difficult times, it is easy for people to want to procure additional income and security, and some car dealers may do that by breaking car repossession laws. The victims are generally facing their own financial difficulties, so it can be vital for them to avoid this illegal and costly procedure. However, there are elements car owners facing this prospect can and should do to protect their property and their credit rating.

Repo Laws

The truth is, repossession laws vary slightly by state, but they are also contingent on the loan contract signed by the buyer. The first step for anyone who is having trouble paying all their bills and may soon find themselves missing a car payment, is to read and understand their vehicle loan contract. Learn what stipulations are included covering if a debtor defaults on their loan. In some cases, a loan agreement considers a debtor in default after one missed payment. At that point they can call for full repayment of the entire loan, or they can repossess the item that is securing the loan, which is generally the vehicle itself.

Illegal Repossessions

While it is legal for a car note holder to place a debtor missed payments, in today’s weak economy, some are using illegal tactics to reclaim vehicles, such as:

Repossessing vehicles which have never been legally established as security for the loan. If the loan in an unsecured loan, or if it is secured by some other type of property, the lender cannot legally repossess a vehicle.

The debtor must have violated the terms of the loan agreement. Some lenders attempt to repossess a car when the borrower moves it out of state, even if that is not a part of the loan agreement.

In most states, the lender must notify the debtor that they are in default and provide them with the opportunity to “cure” the default before they can repossess the car.

The debtor must actually have missed a payment. Some creditors do not keep accurate records and classify a loan in default when no payments have actually been missed.

Some loan agreements require that a payment be ten days late before it can be considered in default.

The repossessing agency cannot “breach the peace” in their attempts to repossess a vehicle. Shouting, threatening, doing physical or property damage all cause the repossession agency to “breach the peace.”

The creditor cannot ask the police to intervene on their behalf. Police can only protect both parties, as well as the property, from harm.

The creditor must value the vehicle at fair market value or sell it in a commercially reasonable manner. However, the creditor does have the right to demand a deficiency settlement for the difference between the amount owed and the amount received in a commercially reasonable sale, as well as repossession and sale costs.

Getting Legal Help with Illegal Car Repossessions

If any of the terms of the loan contract or state repossession laws are violated, the debtor should consult a lawyer immediately to learn their options. They may be able to have the car returned to the borrower and even help them recover some damage compensation.

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