Each state has the legal authority to give consumers legal rights against vehicle repossession agencies. Generally, most states allow repossession agencies to proceed with repossession as long as they do not use threats or violence during repossession. In South Carolina, the repossession agency can repossess a vehicle on private property, on public streets or outside where the owner works. As long as the agency proceeds in a peaceful manner, the repossession is legal.
Vehicle repossessions occur when borrowers obtain loans from banks to purchase their vehicles and, in exchange for extending their loans, banks will require vehicle owners to pledge their vehicles as security or collateral. If a borrower subsequently defaults on his loan, the lender’s legal recourse is repossession. A lender will reclaim its collateral and sell it, using the sale proceeds to pay the remaining loan balance. Before the lender can proceed with repossession, South Carolina’s consumer protection and banking regulations require the lender to give the borrower at least one opportunity to pay his delinquency to avoid repossession.
Buyer’s Remedy to Pay Delinquency
Once a car buyer defaults on her loan agreement, her lender can require her to pay the remaining loan balance by accelerating the remaining payments. Failure to maintain adequate auto insurance coverage, failure to pay her loan on time or failure to report an accident are all grounds for repossession by the lender. Once a lender considers its borrower to have defaulted on her loan, it must provide her at least one opportunity to cure her delinquency.
The South Carolina Code does not include federally chartered credit unions in the right-to-cure statute. Thus, if a borrower obtained his loan from a federally chartered credit union, the credit union is not required to give him a chance to pay his delinquency before it can proceed with repossession. Additionally, lenders do not have to give buyers more than one opportunity to cure their deficiencies. If the borrower defaults on her loan again, her lender can immediately proceed with reclaiming its property without advance notice or giving her a chance to pay her deficiency.
South Carolina law gives buyers a right of redemption to pay their deficiency before the sale -- typically, within 10 days. If the buyer repays the entire delinquency, then the lender must allow her to redeem her vehicle. Moreover, under South Carolina law, buyers have a right to demand sale within three months if they have 40 percent or less remaining on the principal balance of the loan.
Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.
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