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What Happens If
Your Car Is Repossessed
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It’s every car owner’s nightmare. One day while you are at work, you
helplessly watch as a tow truck hooks up your car and drives it away.
Not only is it embarrassing, but it puts you in an uncomfortable position—you
no longer have a car to get you to the places you need to go. Maybe
you had some major medical expense that caused you to be late with your
payments, or perhaps it was just bad money management, but either way,
you need to understand what rights you now have. Read the following
information to help you better understand what steps you need to take
now.
Prevention
It’s much easier to prevent a repossession than it is to reverse one.
It seems that once the repossession is in process, it begins to take
on a life of its own and it’s almost impossible to stop. On the other
hand, most lenders will be willing to work with you for a short amount
of time if you are having problems making your payments. If you find
yourself in this situation, call your lender and explain the circumstances
that are preventing you from making your payments on time. They may
allow you a short grace period, or may even create a new payment schedule
that you can stick to. (If they do this, be sure to get it in writing!)
If the lender simply won’t work for you, and you know that repossession
is just around the corner, then you may consider turning in the car
on your own. Why? Because if your car is repossessed, you will not only
be responsible for the balance due after it’s sold, (more on this in
a moment), but also the costs involved in the repossession, such as
towing and manpower.
Repossession
If you default on your loan, the lender will have the right to come
and haul your car away. Depending on the state you live in, they may
or may not be able to come on your property to do so, without advanced
notice. They are not allowed to create a “breach of peace,” while repossessing
your car. In other words, they can’t make a big scene and let everyone
around you know that they’re taking your car because you didn’t make
the payments! If you have personal belongings in the car, the lender
will likely have to return them to you in good shape, or reimburse you
for them should they disappear. (Again, the laws vary per state, so
be sure to find out what they are in your state.)
Sell
Once the lender has your car, they will likely try to sell it in order
to recoup at least some of the loan balance. By law, they will have
to inform you when and where your car will be sold, and allow you the
opportunity to buy it back. To do so, you will have to pay the entire
balance due, plus any expenses associated with the repossession process.
If you feel that the car wasn’t sold responsibly, you have a right to
dispute it. In other words, if you feel that the lender didn’t try to
get an honest price for the car, you should talk to an attorney about
your options.
Deficiency
When the lender sells your car, you will be responsible for the difference
between the loan balance and what the car was sold for. For example,
if your loan balance was $10,000 and the car sold for $6,000, you would
still owe $4,000 to the lender.
The key here is to keep careful record of the entire repossession process.
When you are in front of a judge being sued for the deficiency amount,
it will be your only chance to dispute the lender’s claim that you still
owe them money. If you can prove that they acted wrongly in either the
act of repossession, or while selling your car, the judge may dismiss
that balance.
About The Author:
Peter Dobler is a veteran in the IT business. His passion for experimenting
with new internet marketing strategies leads him to explore new niche
markets.
Read more about his experience with credit and mortgages; visit
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