Most consumers do not have the cash on hand necessary to purchase a vehicle
outright and must use an auto loan to finance a new vehicle. When a vehicle
is subject to an auto loan, the person who granted the driver credit will
still have rights to that vehicle until it is completely paid off.
The creditor has the ability to repossess the vehicle if the owner falls
behind on payments. Almost all auto loans will include a clause that allows
repossession in case of default. The auto loan will explain the circumstances
that constitute a default. For instance, a default may happen when a person
is more than 90 days behind on payment.
As soon as the borrower is in default, the creditor may come onto a person’s
property without prior notice and take the car. The creditor or bank does
not have to inform you that your vehicle is being repossessed, and it
is a crime in Florida to purposely hide the vehicle from the creditor.
Practically, this means that your car could be repossessed as you run
errands, as you are at work, or as you are parked in your driveway.
The creditor is not allowed to keep your personal property which is left
in the vehicle. The repossession agent is required to take an inventory
of the property that is in the vehicle, and must return that property
to the borrower.
In contrast to involuntary repossession, people who are in default may
decide to voluntarily surrender their vehicle. While this will relieve
some of the anxiety of never knowing when the car will be repossessed,
it will not mitigate the damage done to the vehicle owner’s credit
report. The vehicle will still be reported to the credit bureaus even
if it is voluntarily surrendered.
Once the creditor has possession of the vehicle, the creditor has the option
of keeping the vehicle as compensation for the loan debt or selling the
vehicle. The creditor must advise the borrower of what it plans to do
with the vehicle, and consumers have the right to demand that the creditor
sell the vehicle.
After the vehicle has been repossessed, the creditor must mail the borrower(s)
a notice stating that the borrower has the right to retrieve or redeem
the vehicle if certain conditions are met. Usually, the borrower can retrieve
the vehicle if he or she pays off the outstanding balance or pays off
the loan entirely. However, the loan balance will likely be much larger
than what the borrower initially owed. The creditor has the right to add
fees for the towing and sale of the car, as well as attorney’s fees,
which can increase the balance by several thousand dollars. If the balance
of the loan is not paid off, the vehicle will be sold and the borrower
will be responsible for paying any deficiency on the loan that was not
covered by the sale of the vehicle.
These deficiency balances are frustrating and hard to resolve. Many people
hate making payments towards a vehicle that they no longer own, and the
only way to resolve the deficiency is to either pay off the balance or
file for bankruptcy. Depending on how much a borrower owes, bankruptcy
may be the best option.
If you are facing a repossession, it is important to get experienced legal
help quickly. Once a vehicle has been repossessed, it can be difficult
to work out an arrangement that returns the car. However, many auto loan
companies are willing to work with borrowers to avoid repossession if
a solution is negotiated before a default.
At Loan Lawyers, our attorneys help consumers deal with all types of debt.
If you are being harassed by debt collectors and need help repairing your
finances, contact our office today by calling (888) FIGHT-13 (344-4813).