If you choose to finance or lease an automobile, your creditor has the right to repossess your car if you default on the loan. Repossession is the act of taking back an item (usually a vehicle), without a court order and often without warning, following a loan default. This article focuses on how to get a repossessed car back from your creditor, which is not always an option and varies from state to state.
Since consumers rely on their automobiles for getting to work, shopping for groceries and most other essential activities, repossession can create a host of new challenges for the debtor. The details of what constitutes a default are established by the sales contract, but can be as simple as missing a monthly payment.
Negotiate With Your Creditor
If you think you might be late with your monthly payment or have been given an advance notice of repossession, you may still have time to negotiate with your creditor to avoid losing your car. For example, your creditor may agree to a revised payment schedule, but make sure any contractual changes are detailed in writing. If the creditor refuses to revise payment terms, you may choose to return the car yourself—known as a "voluntary repossession"—to reduce the amount of expenses you may be charged.
If you did not receive an advance notice of repossession, most states allow you to get your car back after a certain number of days have passed after paying off your past due balance and any associated repossession fees. This is referred to as "reinstating" the loan. But if you were given advance notice, you may only get your car back on terms to which the creditor agrees (in most states).
Redeem Your Vehicle
After repossession, the creditor may either keep the car or resell it. Many states require the creditor to inform you of its intentions, such as the date of the sale or the time and place of a public auction, giving you an opportunity to get your car back. In any case, you may be able to "redeem" (buy back) your repossessed car by paying the full amount owed for the vehicle and any expenses pertaining to the repossession.
Finally, a more extreme method for getting a repossessed car back is through bankruptcy protection. Chapter 13 allows you to negotiate a repayment plan; while for Chapter 7 bankruptcy, you must have filed before the car is sold to get it back.
Check with a local attorney for more information about your state's repossession laws and how to get a repossessed car back.