What to watch out for if your car is repossessed

Repossession of a car can be a scary experience. The law requires that the lender (and repossession agent) treat you with respect and dignity. Here are some rules they need to follow:

The repo agent may not breach the peace

This means the repo agent can't:

  • Forcibly remove you from the car

  • Stop you while you're driving

  • Pretend to be a law enforcement agent, or

  • Break into your closed garage to get the car

Any of these things may be a violation of the law and the lender and repo agent could be liable to pay you damages.

They can't repo your car when you're not in default

Your financing contract should describe what is a default on the loan and what isn't. Simply, your car can't be repossessed if it's not in default. But it gets a little more tricky. If the lender has continued to accept payments after an earlier default, it may not repossess the car unless it gives you written notice that it will no longer accept payments.

They have to give you written notice of what's going on

If your lender repossesses your car, before selling the collateral it has to give you written notice of when, where and how the car will be sold. In addition, it has to notify you how much money you would need to pay to get the car back anytime before it is sold.

After a repossession, the lender must send you a notice stating how much the collateral was sold for, and containing a calculation of any amount the consumer is due back from the sale (after deducting the loan amont) or how much the consumer owes (the legal term is a deficiency). It's important to remember that a lender cannot collect a deficiency from you if it has not sent you notice of how your deficiency was calculated.