Did you know you can potentially prevent your car from being repossessed? Don’t assume that once a lender starts the repossession process, there’s nothing you can do. By understanding specific car repossession loopholes, you can take action to protect your vehicle and possibly avoid losing it. If you’re behind on payments or facing financial hardship, you should know your rights.
When Can Repossession Occur?
In most states, it only takes one missed payment to trigger a default on your loan. In reality, your car won’t be repossessed if you’re 30 days past due on your loan. If you miss a payment, be sure to contact your lender and discuss your options before the repossession process is started. If your car is set to be repossessed, here are some car repossession loopholes to consider.
Negotiate with The Lender
Some lenders will allow you to make up the late payments. Before a car is repossessed a notice of repossession must be issued, and a 21-day default cure period is given. Most lenders will work with you as long as you reduce the amount of the balance that is overdue. If you continue to pay down the overdue balance, most lenders won’t try to repossess your vehicle.
You can also check to see if your loan allows for reinstatement. To reinstate your loan you would make one lump sum payment of all past-due amounts, fees, and late charges. If you act quickly, your car may not be repossessed.
Refinance The Loan
If you have good credit, you may be able to refinance your loan with a new lender. You should shop around to find the best rate. In some cases, you may find rates that are less than your current monthly payment.
No Trespassing and Breach of Peace
Each state has different laws regarding repossession. In some states, a car repossession agent can’t enter your private property to repossess a vehicle without your permission, this may include driveways and garages. In addition, the car repossession agent can’t breach the peace, meaning they can’t make threats, block your driveway, or use force to take your vehicle. If the agent enters your property without permission, you may have grounds to sue the lender.
Seek Assistance
States often offer assistance for needy families and local nonprofits can help you pay your bills. Do your research to see what kind of help is available to you so that you can make payments on your car. If you get ahead of missed payments, you may be able to avoid repossession.
Claim Bankruptcy
Chapter 13 bankruptcy is one of the ways to get your repossessed property back. As soon as you file for bankruptcy, the court puts an automatic stay which means that creditors must stop collection efforts. Your debt will then get restructured into a monthly payment you can afford.
Do you have any questions about car repossession loopholes? Let us know how we can help in the comments.
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Teri Monroe started her career in communications working for local government and nonprofits. Today, she is a freelance finance and lifestyle writer and small business owner. In her spare time, she loves golfing with her husband, taking her dog Milo on long walks, and playing pickleball with friends.
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