Imagine walking out your front door and finding an empty parking spot where your car used to sit. Your first guess may be that your car was stolen, but if you’ve fallen behind on car payments there’s a better chance your vehicle has been repossessed.
What Happens When Your Car Gets Repossessed in California?
Creditors can repossess your vehicle if you stop paying towards your car loan, but they have to follow certain California statutes and repo laws meant to protect you. You may think you’ve lost your car forever, but even after a repossession, you have several ways to get your vehicle back.
When is a Creditor Allowed to Repossess My Car?
Unfortunately, missing your monthly payment by even a single day is grounds for a lender to take your car back. The good news is that most lenders offer a grace period. This period is detailed in your loan contract. Creditors usually would rather give you the chance to catch up on payments rather than going through the expense of reclaiming the property.
A car loan isn’t the only payment you must keep up with to hang on to your vehicle. Many loans stipulate that debtors must maintain auto insurance on the car, SUV, truck, or motorcycle they drive. If the debtor doesn’t get the vehicle covered or falls behind on insurance payments, a creditor can decide to repossess.
Who is Authorized to Repossess My Car?
Car lenders most often rely on a repossession agency to attempt to reclaim their property. In California, repo companies are licensed by the State’s Bureau of Security and Investigative Services (BSIS). Repossession agents must present a BSIS ID when you ask to see it.
Employees of the company that owns the vehicle (a car finance company, bank, or auto dealership) can also attempt to repossess the vehicle. They don’t need a repossession license when they take your car.
What Kind of Rules Do Repossession Agents have to Follow?
Creditors don’t have to notify you when they’ve decided to repossess your vehicle or when a repossession company has been contacted. Repossession agents can reclaim your vehicle at any time.
While your car is eligible to be repossessed even if you are not around, repossession company representatives must follow certain rules when attempting to take a vehicle from you. The vehicle must be parked on the street, in a public parking lot, or in any other public area.
Agents are also permitted to take a car right out of your driveway when it’s unprotected. However, they can’t enter a private building without the permission of the property owner. This would include private property like a secured driveway, garage, or a gated community.
You can attempt to hide your vehicle from a repossession agent. However, if this action can be proven by your lender, it can hurt your chances of getting your car, truck, SUV, or motorcycle back once it’s been repossessed.
Can a Repossession Agent Harass Me?
Repossession agents cannot breach the peace when attempting to take your vehicle. This “breach” can include a threat made against you or other aggressive displays.
It can also include the violation of some of the restrictions mentioned above concerning private property. For example, if your SUV was taken from a gated community without permission from a property owner, it could constitute a breach of the peace. You would have grounds for a lawsuit and could also use this violation to avoid repossession fees that arise later.
What Happens After my Car has been Repossessed?
In the first few days after repossession, California requires lenders to notify you of several details. They must send you:
- A seizure notice. Documents that identify the legal owner of the vehicle and the repossession agency. You’ll get the contact information for each company.
- A list of your personal property found in the vehicle. You’ll get charged for the storage of these items. You generally have two months to recover your property. Upgrades to the vehicle, such as a new stereo system and speakers may or may not be returned to you. The matter will be up to the lender.
- Information on how you can recover the car. This will list your outstanding balance on the loan, including penalties, and how far you are behind. Your options to retrieve your car will also be listed.
How Can I Get My Car Back?
California Civil Code guarantees your right to an opportunity to get your car back. Lenders must provide a means for you to catch up on payments and reinstate your car loan.
The vehicle’s owner (the bank, lending company, or dealership) must give you the chance to pay off the loan in full or reinstate the car loan by paying the payments you’ve missed. They must also inform you of the coming deadline when the car can be sold to someone else.
Some factors can affect your right to recover your car. When a lender can prove you provided them false information, they can deny your attempt to get the vehicle back. As mentioned above, if you attempted to hide the car or threatened to damage it, your bid will likely fail.
If you threatened or assaulted anyone attempting to repossess the vehicle, you also give up your chance to reinstate your loan. This is also the case if your vehicle is used to commit a crime. Aside from paying your debts and reinstating your loan, there are a few other options available to you:
- File for bankruptcy: When your financial struggles are serious enough, you may consider filing for bankruptcy. You can often keep your car, at least for a while, while the bankruptcy court decides what your creditors are owed. This could give you time to arrange a new agreement with your lender.
- Talk to your lender: It’s always possible creditors are willing to work with you to avoid repossession. They may accept an alternate payment plan if you earnestly want to catch up on payments.
- Sell the car: You may want to sell the car yourself before repossession and use the proceeds to pay your lender. You can often get more for your car than the lender would get for selling it. However, your lender must approve this sale.
- Refinance: You could turn to another lender to take out a new loan if your credit score allows it. Your new loan would likely be for a longer period of time and could include stiff fees.
Is My Lender Allowed to Sell My Car?
Your creditor is permitted to sell the vehicle if you fail to recover it in time. The length of time the lender must give you before putting the car on the market will be indicated in your loan agreement. Your lender will also notify you of the date and time of the sale. It will be offered up to potential buyers in either a public or private sale.
The sale of a vehicle often doesn’t earn enough money to cover the remaining debt on your car loan. This is known as a “deficiency balance.” It’s common for debtors to still owe the lender money even after the car in question is sold.
If this is the case, the lender has the right to seek the difference in what you owe. They will send you a letter notifying you of what you still owe. They could alert a collection agency or file a lawsuit to force you to pay.
Does a Repossession Show Up on My Credit Report?
Unfortunately, yes. The repossession will sit on your credit report for seven years. This period begins counting down on the date of your first missed loan payment.
If you start paying towards your loan again somewhere down the line and get behind once again, your seven-year countdown could reset from that date.
Contact a Bankruptcy Lawyer Serving Southern California
When your property is at risk of being repossessed and you are facing major financial issues, bankruptcy is an option you should consider. Reviewing your current situation with a bankruptcy attorney can help you determine your best options.
You have nothing to lose by contacting the bankruptcy attorneys with the Law Offices of Steers and Associates in Los Angeles. We offer a free case evaluation. We are happy to listen to your situation and tell you if bankruptcy is the best option to regain control of your financial health.
Elena Steers, the founder of Steers and Associates, has guided hundreds of clients through bankruptcy in order to earn their financial freedom. She uses her extensive background on all sides of debt negotiation to benefit her clients during the bankruptcy process.
You may also find our online guide to bankruptcy helpful, The Ultimate Guide to California Bankruptcy.
Elena Steers is a highly experienced bankruptcy attorney, the founder of Law Offices of Steers & Associates, and previously worked as a Bankruptcy Trustee Assistant at the Office of the Chapter 13 Trustee in Los Angeles. Her current affiliations include the State Bar of California, National Association of Consumer Bankruptcy Attorneys, and Central District Consumer Bankruptcy Attorneys Association.