How to Protect Yourself: Automobile Repossession
Source: The Florida Attorney General's Office
When you buy a vehicle on credit, your creditor retains important rights to the vehicle until you have made your last payment. These rights are established by the contract you signed and by state law. The failure to make timely payments carries serious consequences. Your creditor may have the right to repossess or take back your car without going to court or without warning you in advance. However, state law does place limits on how the creditor may repossess a vehicle and resell it to reduce or eliminate the debt. Consider the following:
Seizing the vehicle.
Reselling the vehicle.
Once your car has been repossessed, your creditor may decide to keep the car as compensation for your debt or resell it in either a public or private sale. In either case, your creditor must notify you about what will happen to the car. If the
creditor decides it wants to keep the car, you have the right to demand the car be sold instead. You may choose to exercise this right especially if the car is worth more than the amount owed on the loan. If the car is sold at a public auction, you must be notified of the date in advance. If sold at a private sale, you will be notified of a date after which it will be sold.
Any resale must be conducted in a "commercially reasonable manner." For example, a resale price which is below fair market value may be unreasonable. If this occurs, you may have a claim against the creditor for damages or a defense against a deficiency judgment. You may also be entitled to buy back the vehicle by paying the full amount owed, plus any expenses incurred by the creditor. Additionally, you may be able to reinstate your loan by paying the amount you are behind on the loan plus your creditor's expenses.
More information on credit counseling organizations, including tips for selecting a reputable organization, is available online at: Credit Repair and Debt Relief Services