California Car Repossession Lawyer
Law Offices of Brandon A. Block specializes in assisting California consumers who have suffered a wrongful vehicle repossession, or who have not been given proper notice of their rights following the repossession or voluntary surrender of their cars. Since its formation in 2007, the firm has helped thousands of consumers eliminate hundreds of millions of dollars in deficiency balances (i.e., the amount remaining on an auto finance account after the auction sale of a repossessed or surrendered vehicle), and it has returned millions of dollars to injured consumers.
The laws concerning repossessions in California are relatively complex, but may be summarized into the following principles:
- Your creditor (the finance company or lender to which you make payments) can repossess your car without going to court. This is known as "self-help" or "nonjudicial" repossession.
- A self-help repossession, while permissible, cannot be completed in breach of the peace.
- Your creditor must provide you with a detailed written post-repossession notice regarding your rights of reinstatement and/or redemption, even if the repossession was proper and conducted peacefully, or you voluntarily surrendered your car.
Learn more about California repossession law below.
Self-Repossession, In General
When you buy or lease a car, or you take out a title loan, your car serves as collateral (i.e., security), and you agree that the creditor can repossess your car without filing a lawsuit (i.e., use self-help repossession) if you miss a payment or otherwise default on your agreement. The creditor itself will not repossess your car. Instead, the creditor will hire a third-party repossession agency to take possession of your car.
Self-Repossession Cannot Be Done in Breach of The Peace
Self-help repossession, while legal, is a drastic remedy and the law imposes very strict requirements on those who repossess cars. One of the key limitations on self-help repossession is that it cannot be completed in breach of the peace, which is discussed in more detail below.
There Must be A Default
While a creditor can repossess a car without filing a lawsuit, there must be a default or breach of the security agreement. The most common default is a failure to make a payment by the due date, though there can be other reasons for a default, such as a failure to carry appropriate insurance. You should always have a lawyer review any security agreement and repossession carefully to ensure that the creditor has retaken possession of the car only after there actually was a default. Sometimes a creditor will agree to a new payment date, but then repossess the car before that new, agreed-upon date. In that case, there likely was no default and the repossession was illegal.
Breach of The Peace
Not only must there be a default under the finance contract, the repossession must be completed without a “breach of the peace”. Examples of a breach of the peace include the following conduct in connection with a repossession:
- repossessing property over the consumer's objection;
- using or threatening to use force;
- threatening arrest or other involvement by law enforcement;
- forcing a person to stop his or her car;
- breaking through a closed or locked barrier (e.g., a garage), or damaging the vehicle.
Rights After a Repossession or Surrender
If you purchased your car in California, you have two rights following repossession or voluntary surrender of your car.
First, you can “reinstate” the contract by paying all amounts past due, plus any applicable delinquency charges, collection and repossession costs. Depending on the basis for the repossession, you may be required to satisfy any liens or encumbrances on the car or obtain insurance. Upon reinstatement, the car will be returned to you and you will begin paying on the contract as if there was no default and repossession.
Second, you can “redeem” the vehicle by paying the entire balance due on your account, plus any applicable delinquency charges, collection and repossession costs. There can be a credit to you for any unearned finance charge or canceled insurance, depending on the terms of the purchase contract. Upon redemption, the car will be returned to you, and you own the car free and clear of any lien.
Reinstating the contract generally costs much less than redeeming the vehicle, and thus is the more desirable and sometimes only option based on the consumer’s financial situation. The right of redemption can never be denied. There are certain, limited circumstances under which a creditor can deny a consumer the right to reinstate the contract, leaving redemption as the only option.
The Required Notices After a Repossession or Surrender
After your car is repossessed or voluntarily surrendered, your creditor must provide you with a detailed written notice of your rights. If a purchase is involved, the notice will concern your rights of reinstatement and redemption, and it will be entitled something like, "Notice of Intent to Dispose of Motor Vehicle". If it is a lease, the notice will concern your early termination liability and appraisal rights, and it will be entitled something like, "Notice of Lease Termination and Early Termination Liability".
The Deficiency Balance
If you cannot afford to reinstate your contract or redeem your vehicle, the car will be sold at auction and the creditor will apply the proceeds of the sale to your account balance. If the proceeds from the auction sale of your car are insufficient to satisfy the entire account balance, there will be a “deficiency”, which the creditor will demand you pay.
Challenging Deficiency Collections
No matter the nature of the transaction (purchase or a lease), the written notice provided by the creditor after a repossession or voluntary surrender must be accurate and include complete disclosure of all charges and other information required by California law. If the creditor does not provide the required notice in the proper form after repossession, you will not owe a deficiency balance. The law is very strict as to the required post-repossession notices, and it always is important to have a qualified attorney review your particular notice to see if it complies with law.
Challenging an Unlawful Repossession
As noted, a self-help repossession must be completed without a breach of the peace. If there is a breach of the peace, you may be entitled to sue the repossession company for damages, for violating the fair debt collection laws and conversion (essentially, civil theft). This is true even if you were in default under your security agreement and the repossession order was proper.