Vehicle Repossession by State — Hot to Stop It

Are you behind a car payment or two and worried about losing your car? Our guide will give you tips to avoid vehicle repossession.

Repossession: Why It Happens + Consequences

As Debtstoppers warn us, car repossession is a legitimate right of your lender. This clause is mentioned in the contract that you sign. As soon as you miss a certain number of payments, your loan will go into default.

This number depends on your contract only: some can continue using a vehicle without paying for months. Others will lose it 30 days after missing a payment. So, study the paper just in case.

The worst part if you fail to pay your dues, the car will be sold at an auction. What’s even worse, if the loaner — like a bank — will fail to amass the money that you owe them in full, you’ll also have to compensate the difference.  

As a cherry on top, the fact you’ve lost your car will be put on your credit story for 7 years straight. But if you manage to get it back, your credit karma will replenish. 

Top Ways to Avoid Repossession

Now, let’s review the most effective ways to combat repossession.

1. Diplomacy

De-escalate the conflict. Call your lender and discuss all possible options you have to cancel repossession even if you have no money to pay right now.

Don’t demonize your lender. In reality, repossessing your vehicle is an arduous and costly process: they have to pay extra to the repo service or rent a tow truck, which may cost around $100/day etc.

Honestly explain your current situation to them. There’s a chance to reach a consensus and win some time to find car payment money.

2. Know Your Rights

Fun fact: repo staff can confiscate your car even if it’s on private property, BUT they cannot breach the peace while doing this. That means they can’t open your garage by force, damage locks, breach doors or use brutal force against you.

If you think that your rights were violated during repossession, contact your local authorities.

3. Go Bankrupt

A radical but effective option. If you file for bankruptcy, this will stop recollection, but only temporarily. Besides, your lender may go to court, and if the judge decides not in your favor, even bankruptcy won’t help.

4. Refinancing

If you’ve studied your contract already and found out that some of its policies are pretty unfair, then… Go to another lender.

You will get a new loan that will: 

a) pay the full price for your car 

b) automatically cancel repossession. However, it’s just a stopgap. If you continue missing car payments with a new lender, your credit history will be a disaster.

5. Reinstatement

This method works if you can borrow some money quickly to catch up with the payment schedule and your car hasn’t been confiscated yet. 

Keep in mind: some states don’t allow reinstatement. But if your lender thinks that’s alright and believes you will pay the loan honestly, they will cut a deal.

6. Strike in Advance

If you know for sure that repossession is imminent — simply sell your car. Another fun fact is that when it comes to the auction, your lender will quickly agree to the best bid they get, which can be lower than the actual price of the car.

But you have every chance to sell it on your own for a higher price. Depending on its technical condition, value, mileage, age, you can get enough to pay the loan. 

7. Surrender

Finally, if no option works for you — take the car to the lender yourself. First, repossession won’t be on your credit history. 

Second, if you owe more than the car costs, you can bargain and get away from paying extra. Besides, you will avoid the nerve-wracking stress.

Repo Opera

Follow our advice, but stay within the law limits, and there’s a good chance to dig yourself out of it.