Consumers Rights In A Automobile Repossession

by Thomas Vargo

Consumers rights in a automobile repossession are established by the law of your state and the by the loan contract you signed. If you fail to make payments on your automobile, your creditor will then have the right to repossess your car without warning you in advance or without going to court.

State laws has limitations on how a creditor can take repossession of a vehicle and resell it to eliminate or reduce your debt. If these laws are violated, your creditor may lose other rights against you and may be required to pay you damages.

When a creditor attempts to repossess a automobile, they may not commit a "breach of the peace" by using physical force or make threats of force. Repossessing your automobile by removing it from a closed garage without your permission or over your protest also may be considered a breach of the peace, depending on your state laws.

After a creditor has taken repossession of your automobile, your creditor may decide to resell it in either a private or public sale or keep the car as compensation for your debt. However, under most state laws, your creditor must notify you about what will happen to the automobile because you have the right to demand that the car be sold instead. You may want to exercise this right if the car is worth more than what you owe on it. If the car is to be sold at auction, most state laws require the creditor to inform of the date and place the automobile will be sold at.

Under certain state laws you may have the right to buyback the automobile by paying the full amount owed on it plus the expenses connected with its repossession. Some states have consumer protection laws that may allow you to reinstate your loan. This means that you can get your car back by paying the your creditor's repossession expenses and the amount you are behind on your loan.

Any sale of a repossessed car must done in a commercially reasonable manner. This does not mean that your creditor must get the highest possible price or even a good price for the vehicle. A resale price that is below fair market value may indicate that the sale was not commercially reasonable.

A creditor cannot keep or sell any personal property found inside or prevent you from retrieving it. However, this doesn't include most improvements made to the car itself, such as the addition of a car stereo or new rims and tires.

A creditor who violates these rights can be subject to pay fines, penalties and your creditor may lose the right to collect on a deficiency judgment. Any difference between what you owe on your loan and what your creditor gets for reselling the vehicle is a deficiency. If you are sued for a deficiency judgment, you will be notified about the date of the court hearing. In order for you to fight the case, you must appear at this hearing. If your creditor violated your consumer rights and failed to resell the car in a reasonable manner or breached the peace when seizing the vehicle, these may be used as defenses against any remaining amount owed.