Vehicle Repossession
Repossession of Your Vehicle and its Consequences
Over the last several months, we have received several e-mails, and phone calls from prospective clients to ask for their options after his or her car has been repossessed. Unfortunately, the bad news is that we usually cannot help most of our prospective client once his or her vehicle has been repossessed. The reason a bank or other lender is able to repossess your car is that they have a “security interest” on your vehicle. This means that the bank or lender has an interest in your car until it is fully paid off. Under Kentucky law, a loan company can take your vehicle at any time as long as it does not “breach the peace.” Breaching the peace usually means using or threatening to use physical force against you to take the car back. In the typical situation, the loan company will auction your vehicle as soon as possible and you would be liable for any difference between the price that the car sold for and the amount you still owed on the vehicle (almost always, a vehicle is “upside down” so there will be a deficiency judgment against you.
The majority of the time, people are left with the following two options following repossession: (1) Redeem the vehicle (pay off the entire balance left on the note of the car) or (2) try negotiating with the lender to catch up on payments. However, please keep in mind that the debtor will be responsible for any costs associated with the repossession; such as towing and storage fees. As such, the best option for most people behind on his or her car payments is to take steps BEFORE your care is repossessed.
To avoid your car from being repossessed is by making timely payments. As long as you make timely payments, the loan company will have no right to come to repossess your vehicle. However, if you are late with your payments, try to make the late payment as soon as possible. Please remember that the “note” (loan agreement) will control your options in making late payments. Some loan agreements allow a person up to thirty (30) days before they are deemed in default of the loan agreement; however, on the other hand, some loan agreements consider you in default if you are late by even one (1) day.
We understand that making timely payments is not an option for certain individuals, so if you absolutely cannot make payments, you may “surrender” the vehicle back to the loan company. By surrendering the car, you avoid the necessary costs in having your vehicle being repossessed. Furthermore, you may be able to negotiate with the loan company to settle any deficiency judgment in full before surrendering your vehicle.
At the end of the day, if your car is repossessed and the loan company gets a judgment against you, it may be in your best interest to file for bankruptcy depending on the amount owed on the deficiency judgment in addition to any other debts that you may have.
Please feel free to contact us at (859) 788-0140 for a FREE consultation.
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