Why Are They Repossessing My Car? How to Fight Vehicle Repossession

Seeing your car being hauled away can be a scary and overwhelming sight. Most people rely on their vehicles to get to work, buy groceries and handle everyday tasks, so car repossession is devastating to your routine.

Learning how to fight car repossession could help you keep your vehicle, but the options are limited once the repossession process starts.

Car repossession happens when you default on your auto loan or if you fail to maintain adequate car insurance on your vehicle. When you finance your car, you agree that the vehicle is collateral. That means your lender can take possession of the vehicle if you don't pay your loan. Your loan defines what default means — and it could happen as soon as you miss a single loan payment, in some cases. You're also required to have a minimum amount of insurance on your vehicle. Your lender can take action if you don't maintain that.

What Happens When a Vehicle Is Repossessed?

Regulations for repossessed cars are set by the state, so the process can vary depending on where you live. Most states don't require advance notice of repossession. According to the Federal Trade Commission, your lender could claim the vehicle as soon as you default on your loan or lease without warning. There are usually some restrictions, such as not using force against you while repossessing the car and not taking the vehicle from a closed garage. Your credit score will also take a major hit.

Once your lender has the vehicle, they'll likely sell it to pay off your vehicle loan. The state might require the lender to notify you of the sale. They also have to follow standard sales practices as established by the state. If the sales price doesn't cover your entire loan, your lender could sue you for the difference if they followed the repossession laws in your state. If you have personal belongings in the vehicle, the lender isn't allowed to keep or sell them. They're required to make arrangements to get your possessions back to you.

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What Steps Do I Need to Take to Fight Repossession?

The best way to fight repossession is to start talking to your lender before they take your vehicle. It's tempting to avoid talking to them when you're behind on payments, but it's the only way to work out a deal to keep your vehicle. You can still try to talk to your lender after they've repossessed your vehicle if they haven't sold it yet. They might agree to work with you on getting your loan back on track.

Before you call your lender, evaluate your financial situation to ensure you can afford the vehicle. If there's a chance you'll fall behind again, it could be best to let the vehicle go. Your lender isn't likely to give you another chance if you default on the loan a second time.

If you're struggling with your debts in general, filing for bankruptcy could stop your vehicle from being sold. Depending on what type of bankruptcy you file, you could get your vehicle back with a repayment plan that helps you get your loan account current. However, bankruptcy is a significant financial event that can majorly damage your credit score and future plans. This should only be an option if you need help restructuring your debt and you can afford to make the catch-up car payments and future payments.

How Do I Get My Car Back?

You might have the option to get your car back if it has already been repossessed. Some lenders will make arrangements if you can get caught up on your payments, allowing you to reinstate your loan. Another option is paying the full loan balance plus late fees and repossession costs, but this isn't financially possible for most people. You can also buy the vehicle back when it goes to auction if you offer the winning bid. You'll have to pay the full amount or have financing arrangements at the time of the auction.

Do I Need a Lawyer to Fight Vehicle Repossession?

When deciding how to fight car repossession, you might consider hiring a lawyer. While an attorney can help walk you through the process, it's not necessary to have one to fight the repossession. You can talk to your lender without legal representation and make arrangements if they're willing to work with you. If you get sued for the deficiency amount, you can hire a lawyer to help you fight it or to understand how the process works and advise you on your legal rights. If you decide to file for bankruptcy to stop the repossession, it's best to hire a reputable bankruptcy attorney.

Most states have consumer protection laws that place restrictions on loan terms and repossessions. Some laws penalize lenders who violate these terms, and if your rights have been violated, you might be entitled to compensation. If you think the lender has violated the law, you should speak with a lawyer.

What Is Voluntary Repossession?

In some cases, you know you can't afford the car loan. Instead of waiting for the lender to repossess the vehicle, you can do a voluntary repossession or voluntary surrender. This means you contact the lender and let them know you want to surrender the vehicle. They'll make arrangements for you to drop off the vehicle. This option may have less of an impact on your credit rating, and you'll also likely have lower repossession fees. However, you still might have to pay the difference if the lender sells the vehicle for less than what you owe.