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Real Talk About Repossessions: Read, Remember, and Share

by | Jan 3, 2023 | Consumer Protection, Debt Collection, Repossessions |

Repossessions present multiple potential issues and claims for a consumer. The first inquiry is whether or not the consumer is in default on his/her obligation to the lender. This usually relates to missed payments or failure to maintain insurance coverage on the vehicle but can be other causes set out in the finance contract. Most finance contracts do not require the lender to provide any advance notice before taking the vehicle. If the consumer has not met the obligations set out in the finance contract then the vehicle is properly up for repossession.

The next question is whether the taking of the vehicle was peaceful. Generally, the vehicle can be removed from the consumer’s property or place of work or any other location so long as there is no destruction of property or breach of the piece in the process. Obviously fact situations can differ and every taking will need to be examined to determine if there was a breach of the peace or other violation regarding how the vehicle was recovered.

After the vehicle has been taken the consumer is entitled to retrieve and regain possession of all personal property items within the vehicle. Note that items that are fixed, screwed, installed, or otherwise attached to the vehicle such that they cannot be easily moved with the mere hands are usually going to be items that cannot be recovered or removed from the vehicle. The consumer should reach out to the lender or the tow truck company/recovery agent as soon as possible to locate the vehicle and make arrangements to regain any personal property. Often after a vehicle is taken it is moved to another location that may be further away or otherwise inconvenient for the consumer to reach.

The next inquiry regards whether the lender has provided the required legal notices to the consumer after the repossession. Under North Carolina law the consumer is entitled to written notice of the lender’s intent to sell the vehicle which should also contain a statement of the monetary amount required from the consumer to regain the vehicle. Note that most finance contracts allow the lender to accelerate the entire remaining balance due on the loan upon the consumer’s default. This means the consumer’s mere payment of any past due amounts at late charges may be insufficient to reinstate the loan and regain the vehicle.

After the vehicle is sold the consumer is entitled to written notice of how the sales proceeds were applied toward the remaining loan balance plus all other costs and expenses due to the lender. If the vehicle sale provides enough money to cover the remaining loan balance and expenses due to the lender and there is still money remaining, the consumer is entitled to the remaining funds. However, if the sale does not bring enough money to cover the loan balance and all fees and costs then the consumer is responsible for the deficiency balance. Many lenders will send the consumer a letter stating the deficiency balance amount and try to enter into an arrangement to pay the balance. If the consumer and lender do not arrive at any arrangement the lender can and likely will sue the consumer to obtain a judgment for the deficiency balance and all legally allowed costs/expenses.

If you or someone you know is facing a repossession or has had a vehicle repossessed feel free to reach out to me or another consumer attorney for an assessment of the situation and potential claims and defenses. There are occasions where the consumer clearly is in default yet the lender’s violations of relevant laws can result in a canceling out of any balance the consumer would otherwise owe and, in some cases, placing money in the consumer’s pocket. Take good care and if you don’t know, don’t guess and don’t take hints from folks who do not know…contact someone who knows and take heed to good advice and counsel.