Car Repossession vs. Replevin

When you take out a car loan or lease, the agreement you sign usually contains language that allows that creditor to keep the car's title and take the vehicle back if you default on the agreement, usually by failing to make payments. The two ways that a creditor can legally regain possession of your vehicle are:

• repossession and
• replevin.

What Is Car Repossession?

If you default on your car loan, the most common way creditors take cars back is through repossession. Repossession is a self-help remedy available to creditors that allows them to take possession of the car; the creditor doesn't have to sue you first.

Most states allow creditors to come onto your property and take the car, even without giving you advance notice. However, a creditor can't repossess your car if it would contribute to a potentially violent situation or breach the peace.

After Repossession

Once the creditor has taken possession of the vehicle, it has a choice of keeping or selling it. The creditor can sell the car at a public auction or private sale. Most states require the creditor to send you written notice of the sale. You might even be able to attend the sale and bid on the car yourself, although creditors frequently dispose of repossessed cars through closed dealer's auctions.

If the car is sold for less than what you owe on the loan or lease balance, the creditor may sue you for the difference in court. This difference is called a "deficiency."

What Is Replevin?

If the creditor can't repossess the vehicle without breaching the peace—for example, your car is in a locked garage—it may seek the court's help through a process called "replevin." With a replevin lawsuit, the creditor seeks an order from the court requiring you to give the car back to the creditor.

If you fail to abide by the court order, you could be subject to civil and criminal penalties. The car loan lender may also get a money judgment against you, usually for the balance owed on the loan or lease, along with charges and costs.

Replevin Procedures

Unlike a repossession, you're entitled to some due process before the creditor can take the car through a replevin proceeding. This means you are entitled to the following:

• written notice of the creditor's intent to obtain an order of replevin
• an opportunity for a hearing
• written notice of the time, date, and location of the hearing, and
• the right to dispute or respond to the complaint.

The period within which you may initially respond to the complaint and request a hearing varies by state but is typically short. So, it's important to act quickly to protect your rights.

Getting More Information

To find information about the specific procedures in your state, do some research on your own (visit Nolo's Legal Research area), contact your state attorney's general office or state consumer protection agency (see State Consumer Protection Offices to find yours), or consult with a local attorney.