Repo Information

California Car Repossessions On The Rise

When a consumer finances the purchase of his or her vehicle, the consumer is liable for the amount owed to the creditor regardless of any life changing circumstances the consumer may experience such as losing employment or other economic or life hardship. If you do not make your payments, the creditor may repossess the vehicle and sue you for the amount owed on the contract also known as a deficiency judgment.

Depending on your circumstances, you should consider whether your situation is short or long term. For some consumers, the inability to pay may be short term. If so a creditor may agree, but is not required, to accept a late payment or grant an extension to pay the late payments and withhold its right to repossession. Any agreements should be in writing. Be aware that some creditors have been charging fees for extending late payments and those fees could be excessive. In some cases, the creditor may offer you the option of voluntarily returning the vehicle also known as surrender. However, it is still a repossession which means you are still liable for the amount due on the contract.

If you believe you may soon face repossession, you should understand your rights.

First, the repossession must take place peacefully. The agent authorized to repossess your car cannot use force or threats of force or damage your property during the process. Likewise, you may lose important rights, if you attempt to conceal or destroy or threaten to destroy the car to avoid repossession.

Second, the creditor is required to notify you with a notice of intent to dispose of the vehicle. The notice must state you have 15 days to either redeem your car or reinstate the loan. If the creditor intends to sell your car, you have the right to redeem which means you pay what is owed, plus past late fees, and costs of repossession. Basically, you buy the car back in full.

You may have a conditional right to reinstate the loan but such right may only be exercised once in any 12 month period and a maximum of twice during the term of the contract. If you qualify to reinstate the loan, you can reclaim your car by paying the past due payments, late fees, and repossession costs and fees. The notice of intent to dispose of the vehicle must state whether you are entitled to reinstate and, if not, must state the reason.

Third, if you do not redeem or reinstate and the car is sold, the creditor must sell the car in a reasonably commercial manner. This means the sale must be at fair market value or for whatever is customary for these types of sales. If it does not, you may have a defense against a deficiency judgment. You have a right to request an accounting of the proceeds within one year after disposition.

In order for the creditor to keep its rights for a deficiency judgment, the notice of intent must be given within 60 days of the repossession and must contain all the statutory requirements which include: (1) your right to redeem, (2) your to reinstate or reason for not being able to reinstate, (3) an itemization of what you owe on the contract including costs and fees, (4) your right to request a 10 day extension for time to redeem or reinstate and how to obtain an extension, (5) state the place where the vehicle will be returned to you and the person and address of where payments shall be made, (6) your right to request an accounting of the disposition of the vehicle. In addition, the notice must state in 10 point bold type that you may be sued for the deficiency and other amounts due on the contract.

A qualified attorney may help you determine your rights and guide you through the process. Because of the short time frame to act (15 days), you should consult an attorney to protect your rights.