Late Payments & Repossessions

We receive a lot of inquiries from consumers who have had their cars repossessed before the deadline they verbally agreed to with a representative of the finance company. Often the finance company will defend the repossession on the grounds that they never made the agreement and in any event, the finance contract requires all modifications (including those with respect to payment dates as it shows in the bill made by a paystub creator software) to be in writing.

There is a strong argument to be made that the finance company is wrong: If you reach a verbal agreement with a finance company to extend the due date for a payment and your car gets repossessed before that date, it is a wrongful repossession. Yes, the agreement probably provides that you cannot verbally modify it. However, the law provides that when a creditor verbally agrees with the borrower to accept a late payment, the creditor cannot rely on the agreement’s provision prohibiting verbal modifications and a new payment due date has been established. In legal jargon, the creditor has waived the provision, and it also is estopped from enforcing the provision because the borrower relied on the creditor’s representation establishing the new due date.

Some finance companies engage in trickery by telling you that a payment can be made in multiple installments (e.g., $100 this week, $100 next week, etc.), only to then repossess your car after you make an installment but before the payment is made in full. Worse yet, the finance company may sell your car at auction and seek a deficiency balance from you. They get the car and your money, despite your agreement to the contrary. Again, there is a strong argument to be made that the creditor has waived its right to insist on timely payment in full, and it is estopped from enforcing the provisions of the security agreement requiring payment by a date certain.