Understand Your Rights When Dealing With Vehicle Repossession!
Whenever you finance or lease a vehicle, or offer a vehicle you already own as collateral for a personal or business loan, the creditor retains certain rights until you have successfully made the last payment per your contract. This typically includes the legal right to seize the vehicle for non-payment.
While cars and trucks are the most frequently repossessed vehicles in the state of Indiana, other vehicles, including recreational vehicles (RVs), boats, airplanes, and all-terrain vehicles (ATVs), are also subject to repossession. Although exact circumstances may vary, some aspects of repossession are universal under Indiana law.
Why is a vehicle repossessed?
A vehicle may be repossessed if you fail to make payments as outlined by your loan or leasing agreement. The lender often has the right to do so after a late payment of as little as one day. However, such a situation is rare unless you've had an extensive history of delinquent payments. An exception to this that you should be aware of are "buy here, pay here" dealerships. Their contracts usually allow them to repossess the collateral at 12:01 am the day after the due date, which is precisely what they do. This allows them to sell the same car multiple times.
What happens when a vehicle is repossessed?
To repossess a vehicle, a creditor usually hires a professional repossession company. The company then sends an agent to acquire the vehicle being repossessed. The agent may arrive at your home unannounced and has the right to enter your property to remove the vehicle.
However, a repossession agent is generally prohibited from "breaching the peace" or obtaining the vehicle through deceptive means. This means that an agent cannot legally:
- Enter your home uninvited to reclaim property.
- Use violence in any way.
- Trick you into having your car serviced at a mechanic in collusion with the repo agent. However, a repo agent does generally have the right to obtain a vehicle being serviced under other circumstances.
- Damage or destroy property to access the vehicle.
How should you respond to vehicle repossession?
Indiana law states that creditors must mail a notice outlining the steps to take to regain vehicle. This usually involves paying what is owed, usually the full amount left on the loan.
A vehicle may be sold to a third party if it has not been claimed by a set deadline. In that case, if the vehicle sells for less than the remaining money owed, you may be sued for the balance, called a "deficiency." Under Indiana law, the vehicle must sell for a "reasonable price"; you may not be obligated to pay the balance if the vehicle has been sold for an unusually low sum. The catch is that there is a presumption of reasonability, so they tend to overpay towing companies, storage lots, etc., with whom they have a personal relationship to create "sweetheart" deals that you have to pay for.
In many circumstances, it's a good idea to consult an attorney in the case of vehicle repossession. If, for example, the lender and/or the repossession company did not properly follow Indiana repossession laws, you may be able to bring a suit against them. Likewise, if you are in the process of declaring bankruptcy, repossession can be held off or reversed.
In many circumstances, it's a good idea to consult an attorney in the case of vehicle repossession
If your vehicle has been repossessed or is in danger of becoming repossessed, consider contacting us to learn more about your options.