What if my car gets repossessed?

If you are behind on your car loan payments and worried your car may be repossessed there are a few things you should keep in mind.  To start, in New York State, if you default on a car loan, the creditor has the right to repossess your car even if you are only a few weeks behind. They also have the right to repossess your car without notice.  They don’t need permission from you or a court to come and take your vehicle.

Repossessions usually happen quickly and without warning.  Most creditors will exercise their right to take a car without notice because they don’t want you to hide or damage it before they can get to it.  Creditors also have the right to hire a third party to come and get the vehicle so if you’re concerned about repossession you should try to get a head of the car being repossessed to avoid these situations.

What To Do If You’re Temporarily Having Problems Making Payments

If you’ve recently lost your job, had an unexpected expense or encountered some other temporary circumstances that are causing you to be unable to make your car payment, contact your lender.  Your car lender may be willing to negotiate an arrangement to help you out in the short term.  This could include temporarily lowering your payments or adding missed payments on to the end of your loan term.  Being proactive and talking to your lender about your situation may help you avoid repossession.

My car got repossessed. Can I get it back?

If your car gets repossessed, you may seek to reinstate your contract by paying all of the past due payments. If the contract is not reinstated, the lender will likely look to sell the vehicle at auction. In New York State, if you have paid more than 60% of the loan when the car is repossessed, the lender must auction the vehicle within 90 days.

If the car is auctioned, the lender will apply the funds first to any repossession or storage fees and expenses and then to the balance owing on the loan. If the amount recovered at auction is insufficient to pay the loan in full, the lender can look to sue you for the balance remaining, called the deficiency.

If you have had a repossession, or repossession is imminent, filing bankruptcy may be an option to assist you with resolving the resulting financial mess.

With a deficiency balance, you may be able to file Chapter 7 or Chapter 13 bankruptcy and either discharge that balance or repay it at a percentage on the dollar. If instead you are looking to save a vehicle, bankruptcy will at least afford you the benefit of the automatic stay for a short time and may allow you the opportunity to pay arrears through a Chapter 13 plan. To determine if any of these options are available to you, it is best to meet with us for a free consultation.

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