Vehicle Repossession – Know Your Rights

If you’re in danger of vehicle repossession, you need to know your rights. Most of us rely on our vehicles to get us where we need to go when we need to go there. We use our vehicles to get from point “A” to point “B” as quickly as possible. Having a vehicle is part of the “American Dream” for most people. For many of us, a vehicle gives us the freedom to go places and do things that we might never have the chance to do if we didn’t have an automobile. That freedom can be lost without warning by vehicle repossession.

That’s why it’s important if you’re involved in vehicle repossession to know your rights. After you sign to finance or lease a vehicle, your creditor or lessor has important rights up until you’ve paid off your loan or lease contract. The contract and your state establish your creditor or lessors rights once you sign it. An example of one of those rights is, if you don’t make payments on the vehicle as stated in the contract, your creditor may have the right to take back, or repossess, the vehicle without taking you to court or without warning you beforehand. They may also have the right to sell your contract to an assignee, a third party that might have the same right of vehicle repossesion.

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According to the Federal Trade Commission, the nation’s consumer protection agency, your creditor’s vehicle repossession rights may be limited. Some states have established guidelines to govern how your creditor may repossess your vehicle and resell it to reduce or eliminate your debt. If a creditors violates any of the rules that govern vehicle repossession, they may lose more rights against you, or they may have to pay you damages.

Your creditor can execute a vehicle repossession as soon as you default on your loan or lease payment in many states. Be sure that your contract states what constitutes a default, but failure to make a payment on time is a typical example. If you default on your note, you may be able to work out an agreement with your creditor to keep the vehicle and bring the loan current. If your creditor agrees to change the terms of your original contract, the terms of your original contract may not apply any longer. If your creditor agrees to changes in the contract, make sure you get the change in writing because oral agreements are difficult to prove in a court case involving vehicle repossession.

Once you default on a vehicle loan, the laws of most states permit vehicle repossession at any time, without notice, and to come onto your property to do so. But if a creditor does come onto your property to take the vehicle, they may not commit a “breach of the peace.” In some states, that means using physical force, threats of force, or even removing your car from a closed garage without your permission.

When creditors commit a breach of the peace during vehicle repossession, the creditor may be required to pay a penalty or to compensate the owner if any harm is done to the owner or their property. A breach of peace also may give you a legal defense if your creditor sues you to collect a “deficiency judgment” — the difference between what you owe on the contract (plus repossession and sale expenses) and what your creditor gets from the resale of your vehicle. State laws vary so you should consult a legal professional in your state about vehicle repossession to know your rights.

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