Your vehicle can be repossessed if your installment note to the finance company goes into default. The definition of default can vary based on what is contained in your installment contract.
Often the default provisions of first tier lenders like GMAC, Ford or Toyota Motor Credit will be more lenient than the default provisions of lenders who service customers with average to poor credit.
Installment contracts from buy here/pay here lenders usually have very strict default language. If you are late even a day or two, the default provision is triggered and you can be at risk for repossession.
No Advance Warning Given
Vehicle lenders do not have to give you advance warning that they are going to seize your vehicle. Cars and trucks are obviously mobile and can be moved or hidden easily. Georgia lawmakers have given lenders (and their repossession agents) the right to grab your vehicle from your home, place of work or anywhere else they can find it.
Repossession agents cannot, however, breach the peace when grabbing a car, meaning that they cannot use force against you, nor can they break into your garage to seize your car or truck.
If the lender and/or repossession agent believes that you are intentionally hiding a vehicle after default, they can file criminal charges against you for conversion (theft).
If you are the vehicle owner and you have gone into default, there is no way to know for sure what is happening. The lender and/or its agent may give you inaccurate or misleading information if you call to ask for a status. If you keep your vehicle hidden for more than a day or two, you could be facing criminal charges.
Once your loan is in default the lender can accelerate the loan and demand the full balance of all remaining payments. Some lenders will work with you, while some will not. Further, you cannot assume that anything a customer service representative says about “working something out” will be truthful. Lenders often mislead customers into revealing where their vehicles are located in order to make it easier to repossess the vehicle.
If your vehicle is repossessed, it will eventually (usually within a few weeks) be sold at an auto auction. After the sale, the lender will sue you for any deficiency balance, so you could end up owing hundreds or even thousands of dollars on a vehicle that is long gone.
If your loan is with a first tier lender and you have a long standing relationship with that lender, you may be able to work out a payment plan that will allow you to reinstate your loan contract. If you choose this route, make sure to get all agreements in writing.
Chapter 13 Can Solve a Repossession Problem
If you sense that the lender is not sincere about reinstating your loan, or if you are struggling financially, then a Chapter 13 bankruptcy might be an option to consider.
Chapter 13 functions as a repayment plan. In many cases, we can use Chapter 13 to restructure your loan and reduce your monthly payment. Depending on the age of the loan we may be able to reduce the balance owed and reduce the interest rate on the balance. We can also use Chapter 13 to cure your default and include any missed payments into the restructured loan.
Chapter 13 also gives you the power of the automatic stay, which stops all repossession activity immediately upon filing. Even if the repo agent is literally circling your block looking for your car, we can put a halt to the repossession by filing.
We have represented many clients who have used Chapter 13 to stop a threatened repossession. Understand, however, that Chapter 13 is a form of bankruptcy and that all your debts – not just the vehicle loan – must be included.
We can also use Chapter 13 to get your vehicle back even after it has been repossessed. Because Chapter 13 is a personal financial reorganization we can argue that you need your vehicle to get to work so you can pay into your plan of reorganization. We can only get your vehicle back, however, before it has been sold at auction so time is of the essence.
If you are facing a possible repossession of your car or truck, or if your vehicle has already been seized, we can advise you about your bankruptcy and non-bankruptcy options. Call us at 770-393-4985 or email us using the form on this page.