It goes without saying, but nobody wants to have their property repossessed. The last thing you want when you’re already struggling to make ends meet is to walk outside to notice your car gone. Next to having your home repossessed (or foreclosed, rather), the next worst thing would be the repossession of your car. However, don’t give up hope just yet – there are ways of getting a repossessed car back. There are also measures you can take before it comes to that point, like filing for bankruptcy.
Our bankruptcy attorneys at O’Bryan Law Offices are skilled in all aspects of financial law, including areas such as repossession. We want to help you in getting your repossessed car back and make sure you’re able to stay afloat while doing so. If you have any further questions regarding financial law, reach out to the professionals here at one of Kentucky’s most revered family-owned bankruptcy law firms.
What is repossession?
Repossession, sometimes called repo, is a term used to describe the process of a lender taking back property when a buyer defaults on payments. The original owner has a right to revoke said property from the borrower or buyer without invoking court proceedings. The most common type of repo is generally the repossession of a vehicle.
If you plan on financing a car, you’ll first need to sign a loan contract. This contract will define what the lender considers to be a loan default, whether it be one missed payment or multiple. This contract also essentially establishes the car as collateral, should your payments become delinquent. It is what gives the lender permission to repossess the vehicle, if need be.
In most cases, a lender will alert the buyer of any missed payments and attempt to collect them before taking any further steps. If the buyer does not respond to these remedial attempts, this is when a repo may take place. In most states, including Kentucky and Indiana, a lender is legally able to repossess your car without prior notice.
Your car may also get repossessed if you allow your insurance policy on your vehicle to default. Because lenders main interest is to protect their own investments, a car without proper insurance can potentially put them at risk. Thus, they may consider this reason enough to collect their collateral and repossess your car.
How many car payments can you miss before repossession?
Most lenders will establish how many missed car payments are acceptable in the terms of your agreement. The language of this contract will inform you of how many missed payments it will take before your car is repossessed. In Kentucky, the average number of days before a car gets repossessed after default payments tends to be about 70. However, this is simply an average and does not reflect any type of law.
There are instances where a creditor may attempt to repossess your vehicle immediately following your first missed payment. In some cases, this may be how they make their living – by repossessing their vehicle at the first chance they get and then selling it off immediately, over and over again. It is an unfortunate scenario, but this is legal and it does happen.
Typically though, it will take a couple of missed payments before they resort to physically taking back the car. In addition, your creditor should inform you of these missed payments, so you should have some kind of warning that a repo may occur.
How does a car repossession affect your credit?
Not only can a car repossession leave you without transportation, it can also negatively affect your credit. A car repo is a derogatory mark on your credit report. This derogatory item indicates to lenders that you may pose a credit risk, which is likely going to affect your potential to obtain new credit. Like bankruptcy, repossessions generally remain on your credit report for seven years from the date your payments became delinquent.
Not only will the repossession be on your credit report, but as will your failure to pay the loan on time. For every month that you are past due, the lender can report your account as delinquent. This will trigger other negative items on your credit file. In the case that a creditor sells your account to a collections agency, that record may also appear as a negative mark in your report. These negative items on your credit report can cause your score to drop significantly.
Can I get my car back after repossession?
Though a repo seems like nothing but bad news all around, there is a silver lining. Getting a repossessed car back is possible. However, it takes both time and money to accomplish. There are a few ways you can get your car back from repossession. You may either catch up on missed payments, pay off the entire loan, or buy your car back at an auction.
By catching up on missed payments, you would be reinstating your loan. This entails paying all past due balances as well as any fees associated with the repossession itself. This may include things like towing and storage fees. You may only have a certain amount of time to do this, though. Your lender should provide you a timeline, often a couple weeks after repo, as well as the due amount.
Before you take extreme measures to take back your car, however, you may want to consider whether you can afford future payments moving forward. You don’t want to get your car back just to have the same situation occur later on down the road.
In addition to reinstating your loan, you also have the ability to redeem it. This is essentially a payoff, meaning that you would be paying the full amount you owe. This includes any past-due payments and the rest of the remaining balance still left on your loan. This also entails costs relating to the repossession, such as towing and storage.
The option of redeeming your loan is typically the most expensive option because you would be paying the balance all at once with a lump sum. You would no longer have to make monthly payments on the car, but you would still need to pay for things like gas and general maintenance. It’s important to consider all potential cost factors.
How To Get Your Car Back After Repossession
If you don’t have enough time or money to reinstate or redeem your loan before the lender sells it off, you may be able to take a different route. The state of Kentucky allows a lender to sell the vehicle they repossessed from you at an auction, given you do not redeem it within their set deadline.
Lenders may either decide to keep your car as compensation for your debt or resell it. If they choose to sell, they may do this either privately or publicly. Privately entails selling to a single person, while publicly usually entails an auction. Kentucky law requires lenders to notify you of the date, time, and place of which they will be auctioning off your car. You can legally attend the auction and bid on your own vehicle, given you have the means to pay for it. If they sell the car privately, the lender must also inform you of the date of this transaction.
Avoid Getting Your Car Repossessed, Call O’Bryan Law Offices Today
The best way to avoid dealing with getting a repossessed car back is to ensure it doesn’t get repossessed at all. This may seem like a glaringly obvious statement, but many people aren’t familiar with the ways in which they can avoid repossession. Some simple measures you can take include making payments on time, limiting how many credit accounts you open, and paying down credit card debt in regular intervals. Our attorneys at O’Bryan Law Offices can help you formulate a plan to do this. We can also assist you in filing for bankruptcy, should it come down to that.
The most important thing you can do in the event that your property becomes repossessed is to know your rights. The repo process can be extremely challenging to deal with and often leaves people wondering where to turn next. Whether you’re in danger of getting your car repossessed or you have already, we can help. Call the knowledgeable attorneys at O’Bryan Law Offices today to see how we can help you through this difficult time.