If you want to reclaim your car, van, motorcycle, SUV, or other motor vehicle after it is repossessed, you may be wondering if you should hire an attorney. In some cases, say you simply want to catch up on past-due amounts or pay off the loan, you probably don’t need a lawyer's assistance. On the other hand, if the lender wrongfully repossessed the vehicle, you'll probably need a lawyer to help you get it back.
Read on to learn more about when it makes sense to hire an attorney and when you probably won’t need one to recover your vehicle after repossession.
The Basics About Vehicle Repossession
If you take out a loan to buy a car, for example, you must sign a contract that states the car acts as collateral for the loan. This means that the lender may repossess the car if you fall behind in payments. Then the lender will sell the car to pay off the debt (or at least part of the debt).
Repossession laws vary from state to state. Often, the lender is able to repossess the vehicle by what is called “self-help” repossession. With this type of repossession, the lender does not have to file a lawsuit in court, but instead can just hire the repossession company to get your vehicle. (Learn more in Nolo’s article Car Repossession Laws: An Overview.)
Should You Try to Get the Car Back?
Depending on your circumstances, you may or may not need assistance from a lawyer to get your vehicle back after it has been repossessed. However, the first thing to think about is whether you should even try to reclaim it.
If you know you can’t afford the payments even if you get the car back, it is probably a waste of time and money to hire an attorney to help you. Likewise, even if you take matters into your own hands and get the vehicle back without hiring a lawyer, all your efforts will be for nothing if you lose it again to repossession shortly thereafter.
On the flip side, if you can afford the payments (or have enough money to pay off the loan) and decide you want the vehicle back, the next thing to figure out is whether or not you need to hire a lawyer.
When You Can Get Your Car Back on Your Own
Depending on the terms of your loan and state law, you likely have two straightforward options for getting the vehicle back.
- You can pay off the loan, which is called “redeeming” the vehicle.
- You can catch up on past-due amounts, which is called “reinstating” the loan.
You probably don’t need to hire an attorney if you want to do either of these things.
Paying Off the Loan to Redeem the Vehicle
To redeem the vehicle, you’ll have to paying the entire loan balance, plus any late fees, collection costs, and repossession costs (such as towing charges, storage fees, repair expenses, and others). Once you redeem, the lender will return the car to you and you’ll own it outright.
Bringing Your Past-Due Payments Current to Reinstate the Loan
To reinstate the loan, you’ll have to pay the past-due amounts (including late charges or other fees), plus the costs of repossession. Upon reinstatement, the lender will return the car to you and you must resume making payments on the contract. (Learn more about the difference between reinstating a car loan and redeeming the vehicle.)
How to Redeem or Reinstate
After the repossession, the lender will probably send you a letter telling you about your right to redeem and/or reinstate. The letter will also usually contain details on how you should proceed if you’d like to exercise either of these options. (If you don’t receive a letter from the lender soon after your vehicle is repossessed, be proactive and contact your lender right away to find out what you need to do to reinstate or redeem. Be sure to request a statement that includes a breakdown of what you must pay and how payment should be made.)
It’s easy enough to arrange either of these options without the assistance of an attorney, though you should be aware that the time period for redeeming and reinstating is limited. You’ll need to act quickly if you’d like to use one of these ways to reclaim your vehicle. (Learn more in Nolo’s article Repossession: Can You Get Your Property Back?)
When You Should Get a Lawyer
Sometimes, repossession is illegal. If you think your vehicle was unlawfully taken, you should consider hiring, or at least consulting with, an attorney. An attorney will recognize what actions constitute an illegal repossession, as well as know how to raise these issues (either directly to the lender or by filing a lawsuit in court) to get your vehicle back.
Below are some examples of situations where the repossession may be unlawful.
The Repossession Company Breached the Peace When Taking the Vehicle
There are certain guidelines that repossession agents must follow when taking your vehicle. They cannot threaten you, use violence, break into a locked garage, or damage your personal property, among other things.
The Vehicle Was Not Collateral for the Loan
The lender can repossess the vehicle only if it has a valid security interest. However, sometimes there are mistakes in the paperwork. For example, perhaps the repossessed vehicle is not in the borrower’s name or the lender listed the car as collateral on a previous loan, but not on the presently defaulted loan.
You Were Late With Your Payment, But This Was Never a Problem Before
If your lender previously accepted late payments agreed to change your payment date, the terms of your original contract may no longer apply. This means you may not actually be in default.
You Are Current in Your Payments
It’s not unheard of for a lender to repossess a vehicle even though the borrower was not behind in payments.
The Repossession Was Due to a Lack of Insurance, But You Had Coverage in Place
The lender can repossess your vehicle if you don't have adequate auto insurance in place. However, if your insurance coverage didn’t lapse (maybe you just switched to a different insurance company), then your lender had no right to repossess the vehicle.
The legal issues surrounding unlawful car repossessions are complicated. It can be very difficult to get your vehicle back without the help of an attorney if any of these things has happened to you.