Car Repossession and Your Rights

My Car Was Repossessed: What Are My Rights?

If you missed payments on your car and the lender is trying take back your vehicle, it’s important to understand what the repossession agent can and cannot do. As frustrating and embarrassing as the situation may be, you do have rights under state law. And an experienced Charlotte NC bankruptcy attorney can help you protect them. Below, we explain what to expect when it comes to car repossession and what you can do about it.

When Can Creditors Repossess My Car?

North Carolina law allows creditors providing car loans to repossess vehicles when a borrower falls behind on payments. If you borrow a loan to purchase a car, the documents you sign make the car collateral for the loan. So repossession of the vehicle is a way for creditors to collect debt.

What Rights Does the Creditor Have?

Creditors have rights to vehicles that serve as collateral for loans they provide. Under state law, they have the right to immediate repossession without advanced notice. Alternatively, creditors can seek a judgment in court against borrowers who default on the promissory note that documents the loan.

Creditors have the right to speed up loan payment upon repossession by making the loan balance immediately due and payable. They will send a notice requiring you to reclaim the car by making this payment by a certain date. If you do not pay the balance by a certain time, the creditor can sell the car at auction. The proceeds from the sale will be used to pay the balance.

If there is still a balance after the sale, the creditor can seek a “deficiency judgment” in court against you. With the deficiency judgment, the creditor automatically obtains a lien against your property. This lien gives the creditor rights to your property and money to enforce the deficiency judgment.

What Rights Do I Have?

Under the law, creditors cannot “breach the peace” when they repossess a car. So they have no right to use violence or break and enter your property to seize your vehicle. They cannot use or threaten physical force. And they cannot remove your car from your residence without obtaining your permission.

State law also limits what creditors can seize with a deficiency judgment from the courts. Creditors may seize any money you have in bank accounts. However, they cannot garnish your wages to enforce a judgment for a car loan. They also cannot seize funds from your retirement or pension accounts. Social Security, college savings plans, IRAs, and awards from personal injury or wrongful death lawsuits are all protected as well.

How Do I Get My Car Back?

If my car was repossessed what are my rights and options for getting it back?

There are three main options available to you:

  1. Pay Your Balance. You could take your car back by paying your creditor the full balance that you owe in a lump sum. This will likely include the unpaid principal and interest on your loan, plus the creditor’s repossession expenses and attorneys’ fees. While your creditor is not required to give you this option, it is worth asking for it if you want.
  2. Buy Your Car Back at Auction. Your creditor is required to send you written notice of the auction of your repossessed car. You could take your chances and bid on your vehicle at the sale. Under the law, the resale of a repossessed car must be conducted in a “commercially reasonable manner.” So, your creditor could accept a higher or lower price than market value as long as it is reasonable.
  3. File for Bankruptcy. Filing for Chapter 13 bankruptcy is an option if you want to recover your car but cannot afford to buy it back. Chapter 13 bankruptcy stops all creditor collection efforts and allows you to reorganize your debt into a repayment plan. You could potentially take your car back if you can make the payments under the three- to five-year plan.

Learn More About Your Rights After Repossession

If you are behind on car payments or have already had your car repossessed, a Charlotte NC repossession attorney can help. At the Law Office of Jack G. Lezman, PLLC, we can help you understand  your rights and how to protect them. Contact us today to learn more.

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