Repossession - Vehicle or Property

This article explains when and why your vehicle or property can be repossessed, your rights, and how you might get the property back.

Here, learn about repossession. Repossession happens when a creditor takes back your vehicle or property because you didn't pay on a loan. The lender can take the thing you borrowed money to buy — but cannot enter your home without permission. Learn how long a repossession stays on your credit report, and how to try to get the property back.

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When can my car be repossessed?

If you default on your written loan agreement, a creditor can repossess a vehicle or personal property (but not a house or land) without advance notice to you and without filing a lawsuit. This is because your installment loan is secured by the property. The back of the car title shows who has a security interest or lien against the car. The most common reasons for repossession are being late on monthly payments or failing to maintain car insurance.

If I’m late on a payment, can the creditor accelerate payments?

If you default on the loan agreement, the creditor can accelerate the payments on the loan and demand that the total unpaid balance be paid immediately.

What are my rights when my property is being repossessed?

A repo man (a person hired by the creditor to take the asset subject to repossession) can come onto your property anytime but cannot enter your house without permission. Property can be repossessed by the creditor or by a person hired by the creditor as long as the process does not involve a breach of the peace. If there is a breach of the peace caused by the repo man, the creditor could be liable. If you feel threatened by the person who has been hired to reclaim the property, call the police. It is against the law to prevent the repossession of the property or threaten the person that has come to repossess it. If you try to prevent the repo man from taking the property, you violate your security agreement and may expose yourself to criminal penalties.

How can I get my property back?

You can redeem your property by paying the debt in full (not just the amount you are behind) at any time before the creditor sells or auctions the property. You may be charged reasonable costs for the repossession in addition to what you owe.

What about hiding the property to avoid repossession?

If you hide the property, you are violating your agreement with the creditor, which requires you to make the property available upon demand. You could also be subject to criminal charges. It is a crime to conceal, remove or harm property on which there is a lien with the intent to hinder enforcement of the lien.

How long will the repossession stay on my credit report?

The repo will stay on your credit report for seven years. Filing bankruptcy may stop repossession and could allow for the return of the property if you can make the payments.

What happens with the property after it is repossessed?

If you do not redeem the property, it will likely be sold at an auction or a private sale. You have the right to advance notice of the time and place of any public sale. If it is a private sale, you are entitled to notice of the date after which a private sale can be made. The proceeds of the sale first pay the cost of the repossession, storage of the property, preparation for sale, and the costs of the sale itself. Any remaining proceeds after the sale are used to pay the debt. If the proceeds from the sale don’t cover the costs, the creditor can file a lawsuit against you to make up the deficiency. If any money is left after the sale and debt, the creditor must pay it to you.

How do I get personal property from my vehicle after its repossessed?

A creditor can’t keep property left in a vehicle and must use reasonable care to prevent others from removing your property. Ask for your property to be returned. If your property is not returned, you can file a lawsuit in small claims court for the property’s fair market value at the time of the loss.