Rules & Regulations for Auto Repos

Your vehicle may be repossessed if you don't keep up with loan repayments.

When a loan is made for the purchase of a vehicle, an arrangement is made stipulating the length of the loan and the payment schedule. If payments are missed, the car may be repossessed.

Repossession Regulations

Each state has its own repossession regulations. However, there is a general rule that stipulates a lender cannot initiate repossession proceedings unless the loan recipient has defaulted on payments. State laws do not define what constitutes a default; you will find that information documented in your loan agreement.

Bankruptcy

If you file for bankruptcy and still have outstanding debts, the law states that no creditor can attempt to collect a debt from you without getting permission from the bankruptcy court. This procedure is referred to as "automatic stay."

Court Order

Most state laws give lenders permission to repossess a vehicle without obtaining a court order. Therefore, if you miss payments a lender can come to your property and reclaim the vehicle. The purpose of this law is to reduce the amount of time spent in courts dealing with daily car repossessions.

References

• Federal Trade Commission: Vehicle Repossession: Understanding the Rules of the Road