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Wrongful repossession

What is repossession?

When you buy a car, truck, or other vehicle on credit, you should be aware that, until you have made your last payment, your creditor retains important rights in the vehicle. These rights are established by the contract you signed and by the law of your state. Your failure to make timely payments carries serious consequences. Your creditor will then have the right to repossess -- take back -- your car without going to court or, in many states without warning you in advance.

However, your creditors right to repossess your car is subject to some limitations. In particular, state law places limits on how your creditor may repossess the vehicle and resell it to reproduce or eliminate your debt. If any rules are violated, your creditor may loose other rights against you, or even be required to pay you damages. For further information about the rights discusses generally below, and about your state's specific repossession requirements, contact your attorney.

Seizing your car

Normally, your creditor has legal authority to seize your vehicle as soon as you default on your loan. What constitutes default will be stated in you contract, but failure to make a payment on time would be one example.

However, if your creditor has agreed to accept your late payment or to change your payment date, the terms of your original contract may no longer apply. Such a change in your credit contract may be made orally, in writing, or sometimes, simply by your creditor's repeated acceptance of late payments without complaint.

Once you are in default, the laws of most states permit the creditor to repossess your car at any hour of day or night, without proper notice, and to come onto your property to do so.

However, when seizing the vehicle, your creditor may not commit a "breach of the peace" by, for example, using force or threats of force. Taking your car over your protest or removing it from a closed garage without your permission also may constitute a breach of the peace, depending on the law in your state.

Should there be a breach of the peace in seizing your car, your creditor may be required to pay a penalty or, if any harm is done to you or your property, to compensate you. Also, because of a breach of peace, your creditor may lose the right to collect a "deficiency judgment." A deficiency judgment is the difference between what you owe on your loan and what your creditor receives when reselling your vehicle. A private attorney can give you guidance about how your state courts have handled with these matters.

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