Repo Laws - Repo Car - Repossessions

The legal definition of repossession is the taking back of a piece of property that was either used as collateral or rented or leased to a person during a transaction. A person’s car will more than likely be one of the final pieces of property that a bank or the IRS will repossess under car repo laws and car repo regulations if that person owes back taxes to the government or has yet to pay back a loan. The person’s house, vacation home, and other property will be taken first before a car is repossessed. A car will be repossessed at the very beginning of a repossession transaction by a car dealership if the car was leased to a person that has yet to pay back the lease, which frequently occurs in the form of voluntary car repossession.

How does it Affect your Credit?

The repossession of one’s car can affect a person’s credit report for anywhere from seven to ten years at a time. The repossession will not come off the credit report until at least seven years to the day that the loan became delinquent. The repossession can appear on a person’s credit report for a period of ten years or longer if a judgment is made on the delinquency.

Having a car repossessed and having it reported on a credit report can negatively affect a person’s credit report. The only way to repair the credit report if a car repossession occurs is to wait the allotted seven to ten years for it to be removed or to dispute the reporting of the repossession with the credit bureau. The information can be removed from the credit report if the repossession cannot be proved within 30 days of being disputed or if the records are incorrect.

Even though a car has been repossessed, a person can still owe the financier money after the repossession has occurred. For instance, if the financier sells the car at an auction but doesn’t receive the amount of money they were owed via the loan, the person who had the car repossessed will still owe the financier more money. To avoid having a car repossessed a person with a car on loan should pay off the financier as soon as possible or to establish a payment plan with the financier or other loan agency.

How to Get Your Property Back?

Don’t worry, if a car is repossessed, it is possible for that person to reacquire their repossessed car after the repossession has taken place. This can be done by paying off the remainder of the loan to the financier, establishing a payment plan, or just by paying the financier the repossession fee. Not every repossessed car can be reacquired by its former owner. Reacquiring a repossessed car all depends on the lender of the loan. If the lender of the loan doesn’t wish to return the repossessed car then the original owner will have to find another form of transportation.

How Can a Lawyer Help?

If a car is repossessed, the owner of the vehicle should consult legal help almost immediately. There are attorneys that specialize specifically in repossession law, which includes the repossession of a car. Repossession attorneys will be able to answer any questions that a vehicle owner might have or can go over your repossession rights if your car is repossessed.

Repossession laws are different from state to state so anyone that has their car repossessed should consult a repossession attorney immediately to understand their case and what they are up against. Even if a car is repossessed the lender is still able to garnish the vehicle owner’s wages and other property if the loan has not been paid off in full.

If you don't make your car payments for a number of months, your lender may repo or repossess your car. Without a car you may not be able to get to work. Without your paycheck, you may not have the money to make your house payment.

Can Filing a Bankruptcy Help?

Filing for Chapter 13 protection can stop the vicious cycle of debt before it gets a chance to ruin your life.

• Under a Chapter 13 plan your car will be protected and you will not necessarily end up paying the full amount you owe on your loan.
• If your auto has already been repossessed, you must file before the auction sale.

Most Chapter 13 plans base your repayment on the fair market value of your vehicle at the time of filing. Often this value is far less than the balance of your loan. A Chapter 13 plan will also allow you to make up missed payments over the life of your plan.

Under the new Bankruptcy Act of 2005, credit counseling may be required or other options may be required.