Repossession

PLEASE NOTE OUR FIRM IS NOT TAKING NEW REPOSSESSION CASES. You may attempt to locate a different consumer attorney to assist you at www.consumeradvocates.org.

The personal ramifications of a repossession can be significant. You have lost your vehicle, which is your method for getting to work, your way to transport your children to and from school, and your lifeline to get to essential services.

Then, there are the enormous legal and financial problems. In most cases, when dealing with a finance company, if you do not pay to retrieve your car after a repossession, the financial institution will sell your car at auction for significantly less than you paid for it and then assess a deficiency balance against you. The deficiency balance is the amount left over after the financial institution applies the proceeds from the sale of the car to the balance of your loan.

If the car was purchased in California, the lender will be required to send a certified letter to your last known address giving you an opportunity to get the car back before it is sold at auction. This statutory letter is referred to as a Notice of Intent to Sell or NOI. There is a time limit for you to act, which can be as soon as 15 days after the date of the letter, so you should contact an attorney regarding the repossession immediately.

One option for getting your car back is to reinstate the loan, which means bringing the delinquent monthly payments current, including late fees and interest, and paying the repossession fees, storage fees, and law enforcement fees associated with the repossession. There may be additional fees depending on the circumstances of your case. However, you may not be given the opportunity to reinstate. One common reason for denying someone an opportunity to reinstate the loan is if the car was previously repossessed within 12 months of the second repossession. Another reason for denying reinstatement is when the buyer hid the car after failure to make payments on the loan. The NOI must tell you when, to whom, and precisely how much you will have to pay.

You also have the option to redeem the contract completely, by paying off the full amount of the loan and getting title to the vehicle. This is called “redemption.” To redeem you would also have to pay the repossession fees, storage fees, law enforcement fees and other charges as well as pay the full amount of the balance of the loan. Again, the NOI must tell you when, to whom, and precisely how much you will have to pay. Often, the NOI can be confusing. If it is confusing to you, you should call the lender to see if there are any other items not contained in the NOI that you will have to do to get your vehicle back. This can help you assess whether it is worth it to get the vehicle back and help us determine whether the NOI is compliant with the law, should we be able to take your potential case.

If you do not retrieve your car and it is sold at auction, the auction price received will be deducted from what you owe on the contract, as well as costs for the repossession and sale. In most cases the auction price is a low-ball wholesale price and doesn’t cover the total amount owed on the car. The finance company will, in most cases, proceed against you for the difference owed on the contract and other costs to file a case against you for breach of contract.

The lender will send you a deficiency letter following the sale of the car at auction indicating what you owe at that time. This deficiency balance will also be reported on your credit. It is important to seek attorney advice at that time, because the lender may have failed to comply with the law in notifying you of your opportunity to get your car back. The NOI has to be very specific. If it does not comply with the law, you do not owe a deficiency balance. Many consumers do not realize they have a legal defense to the alleged deficiency. Note that it is important that you provide the lender your current address so that you receive the legally required letters involving the repossession process. Keep those letters so that they can be reviewed by counsel. You will also need copies of your vehicle sales contract. Keep all the documents involving your car, including purchase documents, in a folder at home. Do not use your car’s glove box as your filing system.

Visit our “Frequently Asked Questions” page for further information regarding Repossession.