What Happens If a Car Gets Repossessed and Who Pays for It

Here’s “must know” information about when and how your car can be repossessed.

If you fail to make your car payments or otherwise default on your loan, you risk having your car repossessed by your lender. Read on to learn more about how car repossessions work, how to avoid them, and what your options are if your car gets repossessed.

Why Is the Lender Allowed to Repossess Your Car?

What happens when your car gets repossessed and you have a loan on it?

Having a vehicle repossessed does not remove the borrower's obligation for the loan. Once the lender repossesses the vehicle and sells it at auction, the finance company also has the right to sue the.

Most people depend on their car to go to work, school, the grocery store, and just about anywhere else they have to be. Therefore, the prospect of having a car taken away (repossessed) is usually a scary one since most people would be stranded without it. But if you fall behind on your car payments, this is exactly what might happen if you are not careful. This is called car or vehicle repossession.

John Roska: What your rights are on repossession | News-Gazette.com

Q: They're threatening to repossess my car because of missed payments. If that happens, what are my rights? Can I catch up the payments, and get my car back?

A: Once a car's repossessed, all buyers have the right to pay off the loan in full, and get their car back. Because you're paid in full, you get title, too. That's the right to redeem.

Is Your Car in Danger of Being Repossessed? | Edmunds

The specter of the repo man haunts many Americans who have fallen behind in their car payments. Some even resort to sleeping in their cars to make sure they don't get towed in the middle of the night. If you've considered bedding down in your backseat, read on.

The best way to avoid the repo man is to stop the repossession process before it starts. Repossessions are costly and can stay on your credit report for seven years. With that in mind, read "What To Do When You Can't Make Your Car Payment," to get a better idea of how to deal with your lender.

Credit Card News

How a car repossession affects your credit

How a car repossession affects your credit

By Allie Johnson | Published: August 24, 2015

If you're behind on car payments and peering through the curtains for the repo man, you should know a vehicle repossession could drive your credit into the ground. But you might be able to put on the brakes.

My sister's car was repossessed. what happens now? what can she do to get it back? Please don't give me stupid answers im very serious right now thanks.

Deficiency After Car Repossession: Will I Still Owe Money? | TheBankruptcySite.org

If your car lender repossesses your car, truck, van, motorcycle or other vehicle, you may not be off the hook financially. If your car was underwater (you owed more than it was worth) you’ll likely still owe money to the lender, called a deficiency. And if your car or other motor vehicle has not yet been repossessed, but you are struggling to make payments, you should understand what a deficiency is and figure out if you’ll owe one before you stop making payments.

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My car was repossessed. Can Chapter 7 help? Will I owe money after my car is repossessed in Florida? BALANCE: What to Do if You Cannot Make Your Car Payments What to Do if You Cannot Make Your Car Payments Having a car provides many conveniences. You

Car Repossession Laws: An Overview What You Should Expect if Your Car Gets Repossessed | Auto Credit Express | Blog A repossession is one of the worst things that can happen if you are hoping to finance another car. Here's why it can happen and what

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Options If You Owe a Deficiency After Car Repo | Nolo.com If you default on your car loan and the lender repossesses it, you may still owed money to the lender, called a deficiency balance. (Here's how car repossession works.) If you don't have any d

What happens to new cars that don't sell? What happens to cars that don't sell by the end of the year? Do they get sent back to the manufacturer? Do they auction them off or sell them for scrap? – Daniel Once new cars leave the factory, they belong t

What happens to new cars that don't sell? What happens to cars that don't sell by the end of the year? Do they get sent back to the manufacturer? Do they auction them off or sell them for scrap? – Daniel Once new cars leave the factory, they belong t

What happens to new cars that don't sell? What happens to cars that don't sell by the end of the year? Do they get sent back to the manufacturer? Do they auction them off or sell them for scrap? – Daniel Once new cars leave the factory, they belong t

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My car was repoed and auctioned and now they want my soul!

So I have hit some seriously hard times over the last few months. so serious that I was unable to pay my car note. After I lost my job over the winter I tried to work something out with the dealership, Honda financial and anyone who thought that they might be able to help. So needless to say my car was repossessed and now they want me to pay them the $8500.00 difference that they lost at the auction. This was a 2007 Honda I bought after I was in a severe car accident last summer and it was only 8 months old when they took the car.

I know there are lawyers and doctors and people who have been through this same exact situation, so I am asking for your help. Does anyone know what I should do? Should I contact them on my own? Should I contact a lawyer? What do I do? Anything would be of great help. Thanks everyone for your time.

posted by Nelsormensch at 8:15 PM on May 27, 2008

posted by nicwolff at 8:30 PM on May 27, 2008

posted by 26.2 at 8:54 PM on May 27, 2008

posted by cschneid at 8:57 PM on May 27, 2008

posted by kindall at 10:14 PM on May 27, 2008

posted by webhund at 11:13 PM on May 27, 2008

You: The car was worth $15,000 and you sold it for $7,000. I owe you $500.

Them: We can't control the price at auction!

You: You sold an identical car at Local Honda Dealer on 3/1/08 for $17,000. So that's what you could have gotten for it. It's not my fault you sold your car for less than it was worth.

posted by gjc at 5:23 AM on May 28, 2008

posted by Juicylicious at 8:05 AM on May 28, 2008

posted by turducken at 8:42 AM on May 28, 2008

My Civic sold at auction and I was still responsible for about $2000.00. I ignored every letter sent, I took a new job out of the state, and got a new cell phone number.

I thought I had lost them. HA!

Just this last fall I was contacted by an attorney's office/debt collector. They did the threatening, and took me to court. Papers were filed and I took out a loan for $4500.00 to pay off the debt.

Yes, 4500 to pay off the 2000 in debt.

Lesson learned: Do not ignore the debt, call your finance company and make payment arrangements right away. You will probably be sent to a collection agency anyway, but they are more likely to make arrangements with you and take less money. This is definitely not worth a bankruptcy. Reserve that for when you may really need it.

posted by phytage at 9:59 AM on May 28, 2008

posted by sondrialiac at 10:33 AM on May 28, 2008

posted by sondrialiac at 10:35 AM on May 28, 2008


when will they repo my car

Collateral Bankruptcy Services, LLC is a company created to specifically address this problem and make it so that you or your client do not have to face and make illogical, tough, costly decisions like the debtor and his attorney were forced to make below.

Unfortunately, there is a growing problem of lenders that are refusing to take possession of vehicles surrendered in bankruptcy. We see this not only with motor vehicles but we are also seeing this occasionally in real estate. Because of low values some lenders are unwilling to foreclose to the detriment of the neighborhood. The lender simply finds the cost of paying maintenance, insurance, and back taxes exceed the value of the home.

The same problem exists with lenders that will not repossess certain motor vehicles. This is true because sometimes the costs of repossessing, refurbishing, warehousing and reselling exceed the vehicle’s value. As an example, in 2002 I filed a Chapter 7 bankruptcy for an individual with a 1999 Honda CB750X Nighthawk motorcycle. In 2002 the client owed HSBC over $6,000 on the bike, and the wholesale value of the vehicle was about $3,500. He indicated that he wished to surrender the vehicle but HSBC refused to come out and take possession. So my client kept the motorcycle having it insured with only a liability policy and riding it occasionally when the mood suited him. Since the debt was discharged HSBC was not allowed to try and collect the money from him and they were unwilling to enforce their lien and take back the vehicle.

To my surprise, this same individual came back to see me again in 2010. Once again he was in need of bankruptcy protection. So we filed another Chapter 7 case for him last year. Having forgotten the whole state of affairs from the 2002 bankruptcy, my client reminded me once again about the bike that he has kept in his possession since the last bankruptcy. So we listed the motorcycle once again on the client’s 2010 bankruptcy schedules along with a disclosure note on schedule D that the bike was offered for surrender in debtor’s previous bankruptcy and the lender refused to take possession of the property. In short order, the bankruptcy trustee formally abandoned the estate’s interest in the motorcycle. Once again the lender refused to take possession of the motorcycle.

My client was then asking me how he could get the lien released if he wanted to sell the motorcycle. So, I offered to file a motion to redeem the vehicle for $1.00. My client decided that he did not want to pay me for one extra hour of my time to draft and file the motion to redeem the vehicle. So the bike sits in my client’s garage, to be taken out for a ride on a nice Sunday afternoon on occasion. The title to the bike remains in motorcycle purgatory.

Assuming that another client wished a different outcome in this type of situation, we might have considered several options. First, the bankruptcy law allows the debtor to retain a vehicle where they pay off the lienholder the actual value of the vehicle in one lump sum. This is called redemption as briefly mentioned above. In a case where the lender is refusing to take back the vehicle they are essentially admitting that the vehicle is worthless. So a motion to redeem with the appropriate attorney and client declarations might be granted by the court with an order to pay $1.00 in exchange for the lender’s release of the lien.

Another option is to keep hounding the lender to take back the vehicle by calling them every few days. There is no guarantee that this will work, however the threat of sanctions for a discharge violation as will be discussed later on might prove persuasive.

Yet another option that was suggested by one of my colleagues was to have the vehicle taken to a friendly repair shop to get the oil changed. When the bill for the oil change is not paid to the mechanic. The repair shop can invoke a mechanics lien and sell the vehicle after first notifying the lienholder who has the option of paying the charges. If the lienholder does not pay the charges, perhaps the vehicle can be sold back to the owner/ customer for the price of the oil change.

Finally, you might be able to bring a motion for contempt against the lender for violating the debtor’s discharge order. There is a First Circuit case, Pratt v. GMAC, where GMAC was held to have violated the discharge injunction for having refused to take possession of a vehicle surrendered in the debtor’s Chapter 7 case. See Pratt v. General Motors Acceptance Corporation, 462 F.3d 14; 2006 U.S. App. Lexis 22446; Bankr. L. Rep. (CCH) P80,6&8; 56 Collier Bankr. Cas. 2d (MB) 1016. So in the First Circuit, if the lender refuses to pick up the car, you can reopen the case and ask that the lender be held in contempt if they do not pick up their collateral. This may or may not work in other circuits depending whether a court in another circuit is willing to follow the rationale of Pratt. At a minimum it makes the threat of seeking a discharge violation a means of convincing an unwilling lender to pick up the property.

The above is an excerpt from Bankruptcy Law Network attorney and contributor, Raymond Schimmel, who lives, works and blogs about problems debtors in bankruptcy face from San Diego, California. To read the full article or others like it, please visit the Bankruptcy Law Network website.