What Happens If Your Car Gets Repossessed?
If you lease or finance a car, truck, or other vehicle, your creditor maintains legal rights on that vehicle until it’s paid off. Under Georgia law, if you fail to make your payments on time or default on other legal obligations, the creditor has the right to repossess the vehicle. In today’s blog, we’re discussing what happens if your car gets repossessed.
What Happens If Your Car Gets Repossessed? Vehicle Ownership
When you finance the purchase of a vehicle and sign a contract with a lender, your rights of ownership are limited. The business that financed the purchase will hold the title to your vehicle until you pay the car loan off in full. Georgia’s car repossession laws provide a means for the lenders to protect their investment in your vehicle. So, if you fail to pay off the loan or fall behind in your monthly payments, the lender can repossess and sell the vehicle.
While Georgia’s repossession laws are designed to protect the lender’s investment, the laws also provide guidance for the consumers.
What Happens If Your Car Gets Repossessed? No Notice of Repossession
The loan agreement between you and the lender describes exactly what “defaulting on the contract” means. Some of the common causes include: late or missed payments, inadequate vehicle insurance, or failing to pay for vehicle repairs. Some lenders may try to work with the vehicle buyer, rather than repossess the vehicle. However, it’s important to note that under Georgia law, lenders do not have to give the buyers notice of repossession. They do not have to check in with the buyer before taking the car, and they do not have to involve the courts.
What Happens If Your Car Gets Repossessed? Repossession Process
Typically, a lender will use a third-party vendor (ex: a tow truck company) to remove the vehicle in question from the property. The lender can repossess the vehicle from public or private property, which means they can remove it from your home, the parking lot at work, or even when you’re running errands and are parked at a bank or a grocery store.
Under Georgia law, the lender and its vendor cannot:
- Break into your garage to remove the vehicle
- Move cars that are blocking the vehicle (in a private or public area)
- Use violence to repossess the vehicle; they cannot break down fences, doors, or windows
- Trick the buyer into leaving the vehicle at an auto shop, and then repossessing the vehicle after the buyer leaves
What Happens If Your Car Gets Repossessed? After Repossession
Once a vehicle is repossessed, the creditor has to send the buyer notice within 10 days, via certified mail, registered mail, or overnight delivery. This notice should provide information such as where the vehicle is being held, the amount of the outstanding loan, any additional fees, and whether the buyer can redeem the vehicle (pay off the outstanding loan and fees). If the buyer is able to pay the outstanding loan and fees in full, they can reclaim the vehicle from the lender.
If the lender plans to sell the vehicle, they must notify the buyer of the date and time of the auction. Also, the lender must give the buyer 30 days to retrieve any personal belongings from the vehicle.
It’s important to note that if the lender sells the repossessed vehicle, and the proceeds do not cover the full amount owed, the lender can sue the original buyer for the amount still owed. This is called the deficiency amount. So, for example, let’s say the buyer defaults on a $10,000 loan and the lender repossesses the vehicle. If the vehicle sells at auction for only $8,000, the lender may sue the original purchaser for the $2,000 deficiency amount. The original buyer may not be responsible for the deficiency amount, however, if the lender failed to provide notice of repossession or if they sold the vehicle at an unreasonably low rate.
How an Experienced Bankruptcy Attorney Can Help
If you are facing vehicle repossession, reach out to the experienced bankruptcy attorneys at Burrow & Associates. Filing for bankruptcy may prevent your creditors from repossessing your vehicle. Our attorneys will evaluate your situation and explain the best options for you and your family. To schedule a free consultation, you can call (678) 323-2394 or use our online contact page. Burrow & Associates has six locations in Atlanta, Athens, Duluth, Morrow, Conyers, and Gainesville.