Car Repossessed, Now What?

If you have a car loan, the lender can repossess your car after a default through “self-help” repossession. This means the lender doesn’t need to file a lawsuit and can just send the repossession company to pick up your car. Self-help repossession is legal but drastic, and the law imposes strict requirements on creditors. Consider the following if your car has been repossessed:

(1) Was there a “default” under your contract? A lender can repossess your car without a lawsuit, but there must be a default under the contract. The most common default is a missed payment, but other reasons can exist, like inadequate insurance.

(2) Who repossessed your car? Only licensed repossession agencies can repossess your car. Verify the company’s license in California. If you didn’t get the company’s name, call the local police department since repossessors must file a report within 24 hours.

(3) Did the repossessor break the law? A repossession can’t involve using or threatening force, arresting or involving law enforcement, forcing someone to stop, breaking through barriers, or damaging the vehicle. Many apartment buildings have gated and locked garages, and unauthorized access to those areas is a breach of the peace and an unlawful repossession.

(4) Did you get proper notice of your rights after the repossession? California law requires lenders to inform borrowers and co-signers of the right to reinstate the auto loan contract by paying past-due payments and repossession and storage costs, or redeem the car by paying the contract in full. A qualified attorney should review the written notice you receive after repossession. California law is strict about its contents.