Having an automobile repossessed is not only frustrating, it can result in you owing a substantial “deficiency balance” and cause serious damage to your credit rating. Fortunately, under California’s automobile financing statutes you still have some rights after your vehicle is repossessed that are designed to protect consumers. This page will answer many of the most common questions about auto repossession. Click on the questions below to find out more.
Have questions that are not listed above? If so, call the Vachon Law Firm at 1-855-4-LEMON-LAW (855-453-6665). We offer free consultations in automobile repossession cases, and can help you determine whether or not your legal rights have been violated. Call or email us today to find out more!
In most cases: no. Banks, car dealers, and finance companies are generally not required to give you any notice that they intend to repossess your automobile. If you are behind on your payments, have not adequately insured the vehicle, or otherwise defaulted on your contract obligations, then the lender is allowed to repossess your vehicle without any notice.
The only instances in which notice may be required is when the lender has said or done something that reasonably led you to believe that it would not yet repossess your vehicle. The most common example of this is when lenders repeatedly allow you to make late payments without repossessing your vehicle. For example, if the lender has been allowing you to make your payments ten days late for over a year, then it would not be allowed to repossess your vehicle prior to you being ten days late unless it gave you notice that it intended to do so.
Another example is when lenders orally tell consumers over the phone that they will give them some extra time to make payments. If a consumer is able to PROVE that the lender made such a statement, then the lender cannot legally repossess the vehicle until the extra time has elapsed. The problem with this arrangement is that it is typically impossible to for consumers to prove the lender’s oral statements. Accordingly, if you are going to rely on the lender’s promise to allow you to make late payments, it is best to get that promise in writing.
There is no legal requirement whatsoever forcing lenders to allow so-called “grace periods” for late payments. Legally speaking, if you are just one day late on your payments the lender can immediately repossess your car without notice.
That being said, most lenders like having you as a customer and therefore do not immediately attempt to repossess your vehicle. However, there is no legal requirement that they must give you any additional time to make your payments.
Whether you have a legal right to get your car back after repossession depends on several factors. First, if your vehicle was leased (as opposed to purchased) then you do not have any legal right to get your vehicle back. That being said, most lenders like having you as a customer and will be willing to work with you if you can convince them that you will quickly pay your overdue payments and then timely make the rest of your lease payments.
If you purchased your automobile, then after it is repossessed you may have a legal right to “reinstate” your car’s purchase contract. Reinstatement means that you pay your overdue payments and repossession charges, and then you get your vehicle back and can keep it so long as you continue making monthly payments. You can reinstate your purchase contract so long as you have not exercised a right to reinstate your contract within the previous twelve months, and the lender does not have reasonable grounds to believe that:
Regardless of whether or not you have a right to reinstate your purchase contract, if you purchased your vehicle then after it is repossessed you have a right to “redeem” it. Redemption essentially means that you pay the repossession charges and also payoff the entire contract balance. After a redemption you will own your car outright and not have to make any further payments to the lender.
The fact that your car, truck, or SUV was repossessed does not mean that you now longer owe anything on your purchase of lease contract. Unfortunately, you still owe the amount due under the contract. After a repossession (and presuming you do not reinstate or redeem your lease contract), the lender will likely sell your vehicle at auction. The lender is then required to apply the auction sale proceeds to the amount that you owe under your purchase or lease contract, and then the remaining amount is the “deficiency balance,” which the lender will likely attempt to collect from you.
If you leased your automobile, then after it is repossessed the lender will likely sell it at auction. However, at least ten days prior to auctioning your vehicle the lender must send you a “Notice of Disposition” telling you when and where the vehicle will be auctioned, and itemizing the gross amount that you will owe, with such amount to be reduced by the proceeds of the auction.
If the lender fails to send a Notice of Disposition, or if the charges the Notice of Disposition are not properly calculated, then the lender cannot attempt to collect a deficiency balance from you. For this reason, if you receive a Notice of Disposition you should immediately call the Vachon Law Firm at 855-4-LEMON-LAW (855-453-6665) and have us review your Notice of Disposition to ensure that it was calculated correctly. We offer free consultations in repossession cases, and will not charge you to look over your Notice of Disposition.
If you purchased your automobile, then the lender will likely attempt to sell your vehicle at auction. However, prior to doing so it must mail you a “Notice of Intent” to sell your vehicle. The Notice of Intent must be sent no more than 60 days after the repossession and at least 15 days prior to the auction sale. The Notice of Intent must inform you of what you need to do to redeem your purchase contract. It must also tell you whether you have a right to reinstate your contract and how to do so, or alternatively provide you with the reason why you have no right to reinstatement.
If the lender fails to send you a Notice of Intent, or if the Notice is not in the proper form, then the lender is prohibited from attempting to collect a deficiency balance from you. Accordingly, if you receive a Notice of Intent after your vehicle is repossessed, you should call the Vachon Law Firm at 855-4-LEMON-LAW (855-453-6665). As stated above, we offer free consultations in repossession cases, and will look over your Notice of Intent for no charge.
If your vehicle is repossessed, it is a good idea to contact an attorney to learn more about your legal rights. You may have a right to reinstate your contract, or you might be able to avoid paying a deficiency balance if the lender failed to comply with the applicable notice requirements. A qualified lemon law or consumer protection lawyer will be able to help you navigate this difficult and frustrating experience.
Luckily, most California consumer protection attorneys who specialize in repossession cases offer free consultations. Accordingly, anyone can afford to get legal advice after his or her automobile is repossessed.
The Vachon Law Firm specializes in repossession, California lemon law, and car dealer fraud cases. If you bought or leased your vehicle from a California car dealership, and it has been repossessed then call us immediately at 855-4-LEMON-LAW (855-453-6665). You can also contact us by email. We will help you determine whether you have a right to get your vehicle back, and may even be able to find a way to eliminate any deficiency balance that the lender intends to collect from you.
Know your legal rights doesn’t have to cost you a thing!