When a person signs a contract to purchase a vehicle, they enter into an agreement that brings with it certain financial obligations. If she should default on this contract, the creditor is generally allowed to take certain actions including repossession of the vehicle. However, the repossession process has rules that must be followed by the creditor and rights that must be upheld for the debtor.
In most states, the contract that is signed at the time of purchase may indicate that the creditor can repossess a vehicle as soon as a payment is missed. Any repossession generally must be done peacefully and without violence on the part of the repossession agent. If damage is done, for example a garage broken into, sometimes the repossessor must pay for any damages.
Once the creditor has repossession of the car, he may now decide to either sell the car to someone else or keep the car to cover the money that is owed to him. Either way, the creditor usually must let the debtor know what the car's future entails. The debtor may be able to buy back the vehicle if she can come up with all the money owed. This may often include expenses incurred during the repossession such as storage and legal fees.
In some states, if a repossessed vehicle still has items belonging to the debtor inside, the debtor must commonly be notified. The creditor should keep the items for the debtor and not sell or lose them.
When a creditor chooses to refinance a vehicle to a debtor who has previously defaulted on a loan, there may be at least one way to make sure he pays on time. An electronic device may be attached to the vehicle that prevents the vehicle from starting unless a timely payment is made. However, this arrangement may serve the creditor's interests more than those of the debtor.
A person who has declared Chapter 13 bankruptcy, either before or after her vehicle has been repossessed, may have her vehicle protected from the creditor. This option, however, will hurt her credit as a result in the future.
If a vehicle has been repossessed, the debtor may want to see a lawyer whose specialty is in repossession law. The lawyer will most likely know the specifics of the particular state and be able to let the debtor know his full rights regarding the repossession situation.
A debtor generally has problems arguing against a repossession once his vehicle has been taken. The creditor can usually show just cause to take the vehicle. A discussion regarding payment arrangements before a repossession occurs may be in both parties' best interests.
